Murdoch set to get his way as bid for BSkyB nears approval


The Government is on the verge of giving the go-ahead to Rupert Murdoch's controversial attempt to take full ownership of BSkyB in return for the media mogul releasing control of the 24-hour news channel Sky News.

News Corporation already owns 39 per cent of Sky, and an announcement could be made as early as today, that its bid for the remainder will not be referred to competition authorities.

In the anticipated trade-off, News Corp would relinquish control of Sky News, which would be hived off into a trust with independent directors, along with representatives of News Corp. News Corp would agree to a legally binding contract to provide funding to Sky News over many years.

Yesterday, government sources said that Jeremy Hunt, the Culture Secretary, had yet to make a final decision on the proposal, which has been drawn up during weeks of negotiation between Ofcom and News Corp. However, they suggested that such a decision was imminent. It would be subject to a 15-day consultation process.

A non-government source said: "Everyone knows News [Corp] have put a remedy on the table and they have been talking to the OFT [Office of Fair Trading] about the detail of that remedy for some time now."

A deal would mean that the bid would not be referred to the Competition Commission, which would otherwise have to decide whether it affected media plurality of the UK. As well as his stake in Sky, Murdoch already owns The Sun, The Times, The Sunday Times and The News of the World.

Any decision to give the go-ahead to the Sky deal without referral to the Competition Commission will be attacked by Labour, who will call on Mr Hunt to publish private submissions on the deal from Ofcom and the OFT. Labour is also likely to argue that any promises made by News Corp on the independence of Sky News cannot be trusted.

Mr Murdoch famously gave promises of editorial independence when he took over The Times and The Wall Street Journal, but critics claim these turned out to be meaningless. Such guarantees may matter less in the case of Sky News, as the broadcaster is already covered by Ofcom's rules on impartiality.

News Corp is desperate to avoid a referral to the Competition Commission, which could take more than six months – during which time the share price of BSkyB could rise significantly. Some observers, including critics of the takeover, have suggested that the Commission would be unlikely to reject the buyout.

In late January, the Culture Secretary said he was minded to refer the deal to the Commission, but decided to delay a final decision pending advice from regulators. He allowed News Corp to talk to the OFT and Ofcom about a possible remedy and talks between the regulators and News Corp have been going on since then.

These discussions are said to have concluded that for the deal to go through, News Corp would have to offer more than just a pledge of independence for Sky News. The proposed trust would be a "structural" remedy allowing the Government to claim that the news channel's independence could be guaranteed. The output of Sky News is highly regarded within the broadcasting industry and last month it was named News Channel of the Year by the Royal Television Society.

Over the past few days, BSkyB's share price has risen by more than 5 per cent to over £7.90 – well above News Corp's initial offer of £7 a share of the stock it doesn't own. Some in the City think Mr Murdoch will eventually have to offer at least £9 a share if he is to get approval from the majority of other shareholders. News Corp, Ofcom and the OFT declined to comment on the discussions.

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