Ian Burrell: Deal that would tighten mogul's grip on the media moves closer

News Corp will have known of Vince Cable's animosity to its bid for BSkyB and will be grateful that the decision is out of his hands
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The Independent Online

From the people that know what is happening this is a big, big thing," boasted Vince Cable of his "war" with Rupert Murdoch's News Corp, as two female undercover reporters from The Daily Telegraph, posing as constituents, hung on his words.

One of the reporters, as she laughed coquettishly at the Business Secretary's fighting talk, said that she "always thought that he [Murdoch] had BSkyB with Sky anyway", a commonly held view.

In reality, News Corp owns 39.1 per cent of the hugely profitable satellite broadcaster and is anxious to get its hands on all the remaining shares, not just because BSkyB – easily the strongest performer in the UK commercial television sector – is likely to be a cash cow for years to come, but because of a host of other opportunities.

Outright ownership of BSkyB will offer News Corp the flexibility to bundle subscriptions to the online operations of newspapers such as The Times, The Sunday Times and the News of the World in with Sky's broadband packages. It would increase the likelihood of success for News Corp's risky strategy of denying free access to these sites.

Earlier yesterday a European Commission inquiry unconditionally approved News Corp's bid for BSkyB on competition grounds. Brussels officials looked at whether Mr Murdoch's newspapers, which include Britain's biggest daily The Sun, would benefit from bundles, such as cut-price subscriptions to the papers for those taking Sky's television offerings. "No such bundling has been attempted before," was the EC's woolly finding.

But the notion of BSkyB as a wholly owned Murdoch subsidiary causes widespread concern across much of the rest of the UK media. Alan Rusbridger, editor of The Guardian, recently wrote that "if News Corp succeeds in buying 100 per cent of Sky, Rupert Murdoch will end up owning nearly 40 per cent of the national press as well as a TV company that is twice the size of the BBC in terms of funding/revenue. It was previously never imaginable that any one individual would have that kind of dominance over the media landscape."

Rusbridger, along with the Telegraph chief executive Murdoch MacLennan, the director-general of the BBC, Mark Thompson, and senior executives from the Daily Mail, Channel 4 and Trinity Mirror, wrote to Mr Cable in October, pleading with him to block the £7.5bn.

Mr Cable was also lobbied by the analyst Claire Enders, who said the purchase of BSkyB would enable News Corp to sustain its newspapers for "the very long term".

At the first opportunity, the Business Secretary referred the takeover to the UK regulator Ofcom, which will investigate the likely impact of such a deal and advise on whether it should be blocked on the grounds of undermining the plurality of UK media. Judging by Mr Cable's comments, he had begun that process before Ofcom had even reported back. "I have declared war on Mr Murdoch and I think we are going to win," he said.

News of Mr Cable's comments was broken not by the Telegraph but by the BBC business editor Robert Peston. He claimed he had been leaked the full version of the Business Secretary's disclosures by a "whistleblower" who was "upset" the newspaper had omitted the remarks from coverage yesterday morning.

News Corp executives were stunned by Mr Cable's comments. The company said it was "shocked and dismayed", adding that "they raise serious questions about fairness and due process". But News Corp will have known about Mr Cable's animosity and will be grateful that the decision is out of his hands. Ofcom, which will conclude its inquiry by the end of the year, will now report to the Culture Secretary Jeremy Hunt, who is less uncomfortable with the scale of Mr Murdoch's activities. For Vince Cable, the war is over.

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