BSkyB puts the frighteners on Pearson

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The Independent Online
Just who does control BSkyB? That question seems worth asking again because of the satellite television company's reported interest in bidding for Pearson. Any such enterprise would give BSkyB control of the Financial Times and 24 per cent of Channel 5 - a state of affairs that regulators and the competition authorities would tolerate only if BSkyB were, as its chief executive Sam Chisholm always insists, completely independent of its 40 per cent shareholder, Rupert Murdoch.

On the face of it, this is not an easy corner to argue. Mr Murdoch is a main board director of BSkyB, and was instrumental in appointing its chief executive, Mr Chisholm, who in turn has a side contract with News Corporation, and sits on its board. Mr Murdoch's daughter, Elisabeth, is now in charge of broadcast operations and all programming. BSkyB is regularly cited by Mr Murdoch in his discussions of News Corporation's global media strategy, and is indeed a key outpost of his world empire.

Ask any other board member who gets the final say on decisions and the answer is unambiguous - Rupert Murdoch. All the same there is a case for arguing that since the company is no longer majority-owned by Mr Murdoch, he no longer controls it. The company's chairman is not Mr Murdoch but Gerry Robinson, whose Granada Group has an 11 per cent holding. Going for Pearson would also involve a high degree of dilution, further undermining Mr Murdoch's position.

All this is a trifle academic, however. It seems unlikely in the extreme that Mr Murdoch would be allowed anywhere near the FT, even if indirectly through a reduced stake in BSkyB. Moreover, the FT is not the target of BSkyB's preliminary musings over a Pearson takeover. The real prize is the television subsidiary, worth perhaps as much as pounds 1bn. This is surely what lies behind the present bout of excitement.

It is an apparent attempt to bounce and frighten Pearson, which is in a difficult interregnum between management regimes, into selling. The attractions of Pearson's TV business to BSkyB are obvious. BSkyB needs to develop its own programming, which at present is largely bought in. Pearson provides a ready-made programming unit, unencumbered except for its stake in Channel 5 by a terrestrial licence.

Mr Chisholm is no doubt as keen as the next man to empire-build, but unless he's seriously fallen out with Mr Murdoch, it is hard to see why he should want to go the whole hog and use BSkyB to build a combined broadcast and publishing group to rival News Corp. That doesn't mean he wouldn't bid for Pearson to break it up, but how much better for everyone if Pearson just sells him what he really wants.