BT will sell Murdoch stake

Shares in News Corporation could be shed to head off regulatory opposition to merger with MCI

BT is prepared to sell the 13.5 per cent stake in Rupert Murdoch's News Corporation it will inherit from MCI as part of the planned pounds 35bn merger to head off opposition from regulators.

Industry opposition to the merger with MCI creating the world's second largest telecoms company will focus on the closer links between BT and News Corporation.

However, BT is determined that potential conflicts from its direct shareholding in News Corporation will not stand in the way of the deal.

"The Murdoch stake is small beer when you put it alongside the strategic importance of this deal," a BT insider said. "There are ways of dealing with the question, and we could always sell the stake."

MCI took its stake in News Corporation last year as part of a $2.4bn (pounds 1.5bn) deal to create a global entertainment and information joint venture. BT, which already has a 20 per cent stake in MCI, declined an invitation to join the partnership. BT chairman Sir Iain Vallance said such a move would have been "a red rag to the slightly parochial reulatory bull".

Under the terms of its investment, MCI must vote its stake with the Murdoch family shareholding. However, MCI also has first rights to buy the Murdoch family holding should they choose or be forced to sell. If the merger goes through, BT would be in a position where it would have rights to a near controlling stake in News Corporation.

Mr Murdoch has hinted that he would like to work more closely with BT. He said last year that an alliance with BT was a possibility.

In the UK, BT is already working with Mr Murdoch on a joint Internet venture. Talks are also underway between BT and BSkyB about co-operation on digital satellite broadcasting.

BT is potentially one of Mr Murdoch's biggest competitors in the UK. It is currently prohibited from using its telephone lines to transmit moving talking pictures into the home. However, that restriction could be lifted by a new Labour government.

Mr Murdoch is conscious of the threat that would pose to BSkyB in which News Corporation has a 40 per cent stake.

However, BT has indicated that it is happy to work with Mr Murdoch rather than against him. Although it did not participate in the MCI joint venture with News Corporation, BT has been extremely supportive of the deal.

BT believes there will be a convergence of entertainment, information and telecomunnications as the multimedia industry develops. The combin- ation of News Corporation as a content provider and BT as a distributor would be extremely powerful.

Telecom industry rivals have already identified the tighter links between BT and News Corporation as one of the weak spots in the MCI merger and are prepared to exploit this as part of vigorous lobbying campaign against the merger.

AT&T, which analysts believe could be most threatened by the merger, hinted yesterday that it would be prepared to fight the merger.

"We are confident that any such deal would get the scrutiny it deserves," AT&T said. "We would expect that our government would condition any such merger on the complete and unqualified opening of the telecom market in the UK."

The BT board met yesterday morning to discuss the MCI merger proposal.

"It all looks very positive," a spokesman said.

The MCI board also met yesterday and the two companies are hopeful they will be able to make a statement later today.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas