Outlook: News Corp and Sky: deal delayed not abandoned

Be careful what you wish for. The Takeover Panel's rules are crystal clear: having just walked away from its bid for BSkyB yesterday, News Corporation will be free to return to the fray in six months' time. By then, the context of such a deal may be completely different.

Indeed, try this thought for size: it is not impossible that in two years' time, the Murdochs will have full control of Sky, but no longer own any UK newspapers at all. Instead, say, one might be able to see the name of Richard Desmond above the door at The Sun or The Times, or even both.

How would such a turnaround come to pass? Well, in a more straightforward fashion than you might think.

Start with the newspapers. Already, in recent days, we have seen speculation that News Corp has been considering a sale of News International, including a lengthy piece in yesterday's Wall Street Journal (proprietor, one Rupert Murdoch).

And why not? After all, the News of the World has already been closed. The Times titles are losing money while The Sun is already being dragged into the hacking morass. The papers have launched a costly gamble on an internet paywall, which shows little sign of paying off, and, sad to say, the print newspaper market as a whole continues to decline.

Would Rupert Murdoch really be prepared to sell these assets? Well, if he wasn't previously, the disastrous events of the past 10 days will surely have made him reconsider, particularly as James Murdoch has never shared his father's passion for print. There have been suggestions it might be difficult to find buyers. But that seems unlikely. Mr Desmond, for example, is on record saying he would love to buy The Sun. There would surely be other bidders, not least from private equity. Even in a shrinking market, leaders have value.

With its newspapers sold, News Corp would be in a far stronger position to renew its quest for Sky. There would be no plurality questions to worry about for one thing (and no messy Sky News compromise required). And the fit and proper person test at Ofcom would be easily surmountable, particularly if the company could show it put its house in order.

Part of the appeal of Sky to News Corp is the potential it offers in combination with the newspapers. But even without that ingredient, the deal remains compelling for News Corp. Sky's success, built on the vision of its backers has made it hugely cash generative and the opportunities for growth across television, telecoms and internet continue, both domestically and in the international market.

News Corp knows that, which is why News International, sooner or later, will be jettisoned for the pursuit of Sky.