How News Corp could be made to sell BSkyB stake
Saturday 16 July 2011
The media watchdog is unlikely to rule that News Corp is unfit to hold a stake in BSkyB, according to an influential media analyst, although the Government could still step in with new cross-media ownership rules.
News Corp's 39 per cent holding in Sky has come under increasing scrutiny in the wake of the phone hacking scandal. It prompted Ofcom to write to the chairman of the Culture, Media and Sport Committee to say it was "monitoring the situation closely" over whether the group was fit and proper to hold a significant stake in Sky.
The regulator can revoke a broadcaster's licence, although it said it would wait for the outcome of other investigations before proceeding.
Claire Enders, the founder of Enders Analysis, believes News Corp has moved to address issues with the closure of the News of the World and the resignation of Rebekah Brooks.
She said: "News Corp has realised it has to take steps to behave in a responsible way." It was unlikely the regulator would force the company to divest its shares or put them into a blind trust, she said. " That isn't a realistic outcome any more."
However, the group also faces a threat from a public inquiry into regulation of the British media headed by Lord Justice Leveson. Ms Enders said: "The Government has signalled this week that no one is comfortable with any one company having such a significant share of one media market" adding that the rules governing cross-media ownership would be reviewed.
Media ownership laws now prevent newspaper groups from taking a large stake or ownership of ITV, but other channels and providers, such as Sky, are not included. That rule could be changed, however.
Ms Enders said it had become "absolutely clear" that News Corp could not resurrect its bid for Sky with its current portfolio of media assets in the UK. "If they want Sky, the newspapers have to go," she said.
Meanwhile, Pirc, which has been vocal in calling for the reform of Sky's board, said the Institutional Investor Committee (IIC) should intervene at the company. Pirc managing director Alan MacDougall said the IIC could play a "hugely constructive role".
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