How Sky News could be sold
BBC business editor Robert Peston on the future of Sky.
I am going to write a bit more about News Corps' plan to buy Sky this morning, as I wait to board my plane to Zurich, the first step of the meandering journey to the World Economic Forum in Davos.
But I will digress at the start by quoting from the end of Mervyn King's speech of yesterday. What caught my eye was this resonant phrase:
"The Bank of England cannot prevent the squeeze on real take-home pay that so many families are now beginning to realise is the legacy of the banking crisis and the need to rebalance our economy."
You can guess what the governor thinks of banks paying huge bonuses in these circumstances.
But on to Sky - and the view in the City of London of yesterday's decision by Jeremy Hunt to give News Corp some time to propose remedies to the harm that Ofcom sees arising from its proposed takeover of all of British Sky Broadcasting.
Investors have concluded - as I mentioned yesterday - that News Corp will put forward a plan to spin off Sky News, since it is the independence and distinctiveness of Sky News that Ofcom fears is most in jeopardy.
This is more easily do-able than I may have initially thought. British Sky Broadcasting would - I am told - simply have to guarantee to buy Sky News's output for a very long time, probably a minimum of 10 years.
With that guaranteed income stream, which would have to be sufficient to cover Sky News's costs, there would probably be quite a few potential buyers of Sky News, both media industry buyers and financial buyers.
But there is an important wrinkle here about the timetable for such a disposal or spin-off of Sky News that the culture secretary might demand.
News Corp will almost certainly promise to separate Sky News just as soon as the takeover of BSkyB is completed. And News Corp would undoubtedly give legal undertakings that would satisfy Mr Hunt, his lawyers, and the regulators at the Office of Fair Trading and Ofcom.
But if Mr Hunt were to agree this post-deal cure, he would potentially pull the rug from under BSkyB's board and from BSkyB's unaligned shareholders.
Because in those circumstance, News Corp could simply slap its lowest credible takeover bid on the table, perhaps just 50p more than the 700p offer which BSkyB has already rejected - and News Corp would dare BSkyB's independent directors and investors to reject it.
But if Mr Hunt were to insist that the Sky News problem was fixed before completion of the takeover - a fix-it first process which is frequently employed in similar circumstances in the US - then the entire power relationship between News Corp and BSkyB would be altered.
Because News Corp would need the co-operation of BSkyB's current board to sell Sky News. And the undoubted price that the BSkyB board would extract for their help would be a significantly higher takeover price, something no lower than 800p a share and possibly higher than that
How much money is at stake? Well for those who own the 61% of BSkyB shares not already owned by News Corp, a requirement from Mr Hunt that Sky News is fixed first rather than later could mean they receive around £1bn extra for their shares (so perhaps £8.5bn to £9bn for their stake, versus News Corp's original offer of £7.5bn).
Here's what Mr Hunt should perhaps consider - that the small print of how News Corp plans to solve the Sky News issue may determine whether investors (looking after our savings) see him as a hero or something else.
You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.