U.K. Culture Secretary Delays Decision to Refer News Corp/BSkyB Deal

Jeremy Hunt says he will consider 'undertakings' from New Corp. before confirming his previous decision to refer it to the Competition Commission.

 

LONDON -- U.K. Culture Secretary Jeremy Hunt said Tuesday he is delaying a decision over whether to refer News Corp.'s proposed takeover of BSkyB to the Competition Commission until he has considered new "undertakings" from News Corp.

The British minister said that on the basis of advice from the media regulator Ofcom, he believed the deal was potentially anticompetitive. But he will now take extra time to a consider series of new "remedies" that News Corp. has put forward, which could potentially remove the need to refer the deal to the additional regulator.

"On the evidence available, I consider that it may be the case that the merger may operate against the public interest in media plurality," said Hunt, citing the Ofcom report and meetings with interested parties.

"However, before doing so it is right that I consider any undertakings in lieu offered by any merging party which have the potential to prevent or otherwise mitigate the potential threats to media plurality identified in the Ofcom report," he added.

Rupert Murdoch's News Corp. is keen to avoid the deal being referred to the Competition Commission because the additional six to eight months of regulatory probing would likely make the $12 billion deal more expensive, if -- as expected -- Sky's shares continue to rise. Shares in the company were up marginally on Tuesday at £7.56 ($11.93), well above News Corp.'s initial £7 share offer.

"News Corporation says that it wishes me to consider undertakings in lieu which it contends could sufficiently alleviate the concerns I have such that I should accept the undertakings instead of making a reference," Hunt went on. "It is appropriate for me to consider such undertakings."

News Corp. has responded to the news by branding Ofcom's report "deficient" and arguing that the takeover would not give News Corp. greater control of the U.K. media market place.

"While Ofcom acknowledges that the combination of News Corporation and BSkyB would have a minimal impact on consumers and would not enhance News Corporation's ability to influence the news agenda, it nevertheless concludes that the transaction may be expected to operate against the public interest."

Hunt said that he could not be sure how long the additional process will take before he reaches a decision on whether to clear the deal or refer it to the additional regulatory scrutiny of the Competition Commission.

"My main concern is not to work to an arbitrary timetable but to ensure that I reach my decision in a fair and even-handed way which is transparent and ensures that all concerns are properly considered," he said.

News Corp's proposed takeover of BSkyB is proving a political hot potato, not only because of the competition issues involved in allowing the U.K.'s biggest pay TV giant and second biggest news provider to be acquired outright by an American company.

Culture secretary Hunt only took charge of the politically divisive deal a month ago after Business Secretary Vince Cable was stripped of responsibility for the deal.

Cable -- the supposedly neutral minister of state -- had told undercover newspaper reporters "I have declared war on Rupert Murdoch and I think I am going to win" even before he had received regulatory advice on the deal.

More recently, allegations that newspaper reporters on the Murdoch-owned News of The World routinely illegally hacked into phone message services has led to further anxieties about letting News Corp. have more control over the media here.

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