BT will sell Murdoch stake
Shares in News Corporation could be shed to head off regulatory opposition to merger with MCI
Sunday 03 November 1996
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.
- 1 What happens to your body when you give up sugar?
- 2 This is what the photographer has to say about the picture of a weasel riding a woodpecker
- 3 Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
- 4 Have sex with your iPad thanks to the new sex toy no-one asked for
- 5 Average penis size revealed: Scientists attempt to find what is 'normal' to reassure concerned men
Bill Clinton portrait features Monica Lewinsky reference, artist admits
Japanese island overrun with cats after population explodes
Delhi bus rapist blames dead victim for attack because 'girls are responsible for rape'
Pornhub turns masturbation into energy in bid to save the planet
The 'sex selfie stick' lets you FaceTime the inside of a vagina
New theory could prove how life began and disprove God
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
This is what it's like to be dead, according to a guy who died for a bit
Durham Free School: 'Creationism taught at' free school facing closure
Ukip would cut billions from Scottish budget to fund English tax cuts
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
iJobs Money & Business
£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...
£50000 - £60000 per annum + Excellent Salary: Austen Lloyd: An outstanding new...
£20000 - £21000 per annum + uncapped commission: SThree: As a graduate you are...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...