Business

Ofcom expected to review News Corp's bid for Sky

BBC business editor Robert Peston on the future of Sky

James Murdoch's hopes of keeping News Corporation's planned takeover of 100% of British Sky Broadcasting away from the scrutiny of the media regulator, Ofcom, look set to be dashed.

I have learned that the Business Secretary, Vince Cable, is likely to issue what's known as an intervention notice, under the 2002 Enterprise Act, asking Ofcom to advise him whether the takeover would restrict "plurality" or the diversity and number of voices in the media industry - and whether there should therefore be a lengthier and more detailed probe by the Competition Commission.

The decision hasn't yet been formally taken by Mr Cable, because News Corporation hasn't yet made a formal notification of its desire to buy the 61% of BSkyB which it doesn't already control.

But I understand that the business secretary has been advised that the takeover raises concerns about a reduction in the variety and number of media "voices" in the UK, which would justify an Ofcom probe.

The disclosure is likely to infuriate News Corporation and the chief executive of its European and Asian operations, James Murdoch, who expected and hoped that the deal would be assessed only in Brussels by the EU competition regulator and only for its impact on the competitive landscape.

News Corporation has been confident that it could demonstrate that the combination of BSkyB with News Corporations' UK newspapers - the Sun, the Times, the News of the World and the Sunday Times - does not pose a serious threat to competition.

But plurality is a more nebulous and - some would say - more subjective concept than competition. So News Corp will be concerned that a reference to Ofcom and then potentially to the Competition Commission could delay and even stymie the deal.

Ofcom's website says that the public interest test of media mergers involving broadcasters or involving broadcasters and newspaper groups is that there needs to be "a sufficient plurality of persons with control of the media enterprises serving that audience in relation to every different audience in the UK or a particular area/locality of the UK".

It also says that there is a public interest in ensuring the availability "throughout the UK of a wide range of broadcasting which (taken as a whole) is both of high quality and calculated to appeal to a wider variety of tastes and interests".

In June, News Corp told the board of BSkyB that it was prepared to pay 700p a share to take full control of the leading satellite broadcaster, a price that values the whole of BSkyB at £12.2bn. BSkyB's directors said the offer was £1 per share too low, but agreed to resume negotiations after regulatory hurdles have been cleared.

BSkyB is the biggest broadcaster in the UK. Its revenue in the UK was £5.9bn in the 12 months to June, which compares with the BBC's global revenues of £4.8bn.

News Corporation's UK publishing interests, owned and managed through its News International subsidiary, account for well over a third of all national newspaper circulation in the UK.

You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.

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