EU Clears News Corp. to Buy BSkyB

"I am confident that this merger will not weaken competition in the U.K.," Joaquin Almunia, the EU competition commissioner, said Thursday of the deal, which is opposed by a majority of British broadcasters

 

LONDON -- Rupert Murdoch's ambition to own British pay TV giant BSkyB outright came a step closer Tuesday when the European Commission unconditionally approved News Corp's bid to take full control of the phenomenally successful and cash-generative British satcaster.

The pressure is now on British business secretary Vince Cable, now the last port of call when it comes to blocking the politically controversial deal -- already opposed by the majority of British news providers.

News Corp. welcomed the decision, which removes one barrier from its bid to acquire the 61% in Sky it does not already owned in a deal that could value Sky at around $12 billion. Sky announced its 10 millionth subscriber earlier this year, and has proved to be a market leader in such offerings as sport, movies, HD and 3D TV.

The European Commission has squarely put the ball back in the British government's court on the deal, after clearing the deal on competition grounds at the earliest stage possible. The Commission had the option of opening up a second phase of its inquiry -- delaying its decision by several months -- but waived it after News Corp's extended submission and a number of concessions offered earlier this month.

"I am confident that this merger will not weaken competition in the United Kingdom. The effects on media plurality are a matter for the U.K. authorities," Joaquin Almunia, the EU competition commissioner, said in a statement Tuesday.

Cable has already called on British media regulator Ofcom to advise on whether the deal should be blocked on media plurality grounds. Ofcom has until the year-end to issue its advice on whether the takeover will affect the U.K. media market and whether it will diminish the number of competitors in the news market here.

He responded to the Commission's judgment Tuesday by saying that its deliberations were unrelated to the British investigation.

"Whilst it has found there are no issues on competition grounds, the EC's decisions on this are independent from the outcome of the separate U.K. investigation into the merger's potential impact on the sufficiency of media plurality within the U.K.," he said.

"Ofcom are due to report into this separate matter by the end of this month. I will review their findings once parliament returns and I will then take the decision on whether this case needs to be referred to the Competition Commission for a full investigation."

The Competition Commission, Britain's antitrust regulator, could still open an investigation into the full market impact of the deal, including the possibility that News Corp's ability to bundle such services as newspaper apps, television subscriptions and news services could affect the market here.

BSkyB announced operating profits of £1.1 billion ($1.7 billion) in 2010 on total revenues of £6 billion ($9.3 billion) for the year.

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