Backlash for Jeremy Hunt over BskyB deal

Culture Secretary Jeremy Hunt faced an angry backlash from Labour and several media groups today after paving the way for Rupert Murdoch's takeover of BSkyB.

Mr Hunt has agreed beefed-up proposals that will see Sky News run as an independent company to allay fears that the deal would give Mr Murdoch's News Corporation too much control of the media.

A consultation has been extended to July 8, after which Mr Hunt will decide whether to wave through the merger once and for all or refer it to the Competition Commission.

Mr Hunt said regulators had confirmed that the safeguards would "remedy, mitigate or prevent the threats to plurality" thought to be posed by the original plans.

And he strongly defended the "transparency" of the process amid a furious onslaught in Parliament when he was forced to appear before MPs to explain his decision.

In terse exchanges, Labour MP Tom Watson, who tabled the urgent question, described it as a "seedy little deal (that) would shame a banana republic".

Mr Watson has been a vocal campaigner over the News of the World phone hacking scandal and criticised Mr Hunt for trusting the word of News Corp, which owns the Sunday newspaper.

Former deputy prime minister Lord Prescott, a suspected victim of hacking, said Mr Murdoch was not a "fit and proper person" to control BSkyB.

The decision came "shortly after the Prime Minister met Mr Murdoch", he told the upper chamber.

Shadow culture secretary Ivan Lewis also sought to link the issue to the police phone hacking investigation, suggesting the deal should have been referred to the Commission.

Mr Hunt insisted he took every step to be transparent after the issue was switched to his remit when Business Secretary Vince Cable was caught saying he had "declared war" on the Murdoch empire.

"I am perfectly well aware that on an issue like this, no one is going to trust the motives of politicians," he said.

"And that is why, at every stage, I have sought independent advice from Ofcom, the independent regulator, and from the Office of Fair Trading."

The most recent consultation period, which received 40,000 responses, produced no new evidence that caused Mr Hunt to alter his provisional opinion that the merger should go through.

News Corp, which also owns The Sun and The Times newspapers in the UK, wants to buy the 61% of shares in BSkyB it does not already own.

The revised plans disclosed today would make sure that Sky News has an independent director with senior editorial experience and a monitoring trustee to ensure News Corp complies with the deal.

Sky would also have to continue to "cross-promote" Sky News on its channels.

An alliance of media organisations opposed to the deal, including BT, Guardian Media Group, Telegraph Media Group, Trinity Mirror, Northcliffe Media and Associated Newspapers, said they were disappointed with the decision.

A spokesman said: "A number of questions are raised by the remedies which are supposed to limit the impact of this deal on pluralism. We continue to believe this matter should have gone before the Competition Commission for a full inquiry."

Attention will now shift to how much News Corp will have to pay to win the approval of BSkyB's shareholders.

BSkyB's performance has improved in the year since News Corp made its approach and its share price is currently at nearly 850p, having increased by more than 50%.

Some analysts estimate that it may have to offer at least 950p per share, valuing the company at £16.7 billion - £4.4 billion more than its previous proposal.

The pound has also strengthened against the dollar in the past year, which will add a further £1 billion to the price US-listed News Corp will have to pay.

Mr Murdoch's plans could be delayed further if online campaign group Avaaz successfully applies for a judicial review of the decision.