Cable slams the brakes on Murdoch Sky takeover

By Peter Wozniak

News Corp’s planned takeover of the broadcaster BSkyB hit a major stumbling block today, as Vince Cable made a dramatic intervention in the case.

The business secretary referred the matter to Ofcom to determine whether the move should be stopped in the public interest. Mr Cable will make a final decision after the watchdog submits its report by the end of this year.

“On the basis of the information and submissions available to me, I have decided that it is appropriate to issue an intervention notice in this particular case,” Mr Cable said.

“The independent experts at Ofcom will now investigate and report to me on the media plurality issues that may arise from this proposed acquisition.”

The intervention comes just one day after News Corp filed its application for the takeover with the European Commission for regulatory approval, which will release its own findings on December 8th.

The application, which signals the endgame in the long-running saga over the takeover, has seen an unlikely alliance of rival media groups pressure the government to prevent Rupert Murdoch’s company increasing its share in BSkyB from 39% to total control.

The size of the deal meant News Corp has to seek European approval before completing any takeover.

It had been expected that Mr Cable would make a decision at some point in the next two weeks while the European Commission is conducting its own investigation.

The fact that the business secretary has stepped in at the earliest possible opportunity suggests the takeover will not be nearly as smooth as News Corp might have hoped.

Mr Murdoch is said to have been confident that he could win an argument over competition – the basis for the European approval. But the debate over ‘media plurality’ – the subject of the Ofcom investigation – is likely to be somewhat tougher.

The negotiations between News Corp and the BSkyB board have not been finalised, with an earlier offer of 700 pence per share in June rejected. But the application to the Commission sets the wheels in motion for the final stages of the move.

The Commission report on December 8th will determine whether the takeover deal complies with European competition laws. The probe may then be extending into a 125-day ‘phase 2’ investigation.

If Ofcom’s report suggests the deal could damage the plurality of media organisations in the UK, then Mr Cable will face another decision on whether or not to refer News Corp to the competition commission.

The opposing media alliance, which including the owners of the Telegraph, Daily Mail, Guardian, BBC and Channel 4, all claimed the takeover would effectively end plurality in the British media – and had pleaded with the business secretary to block the move on competition grounds.

If News Corp does gain control of BSkyB, Mr Murdoch’s companies will be able to comfortably outspend its nearest rivals.

Today’s intervention is the first sign the government is willing to take active steps against the continuing enlargement of News Corp’s media interests in the UK.

All four Murdoch-owned papers supported the Conservatives in the general election, prompting allegations of undue media influence on the government.

Labour lauded Cable’s intervention but echoed those allegations by warning the coalition against seeking a “political fix”.

Ivan Lewis, shadow culture secretary, wrote in the Guardian: “The Murdoch empire has sometimes crossed reasonable boundaries with overzealous business practices and the assertion of political power.

“There is a case to answer, and the public interest can only be determined through proper scrutiny by the competent authorities.

“If [the government] seeks a political fix in Downing Street, with guests visiting through the front or back door, we will not hesitate to expose the hypocrisy of its claim to be acting in the national interest.”