BSkyB Presents Case for News Corp. Bid

Claims move to block deal could mean less incentive to invest in Sky News.


LONDON -- BSkyB has said its independent directors believe News Corp.'s takeover bid "could be in the interest of shareholders," if the deal price is right -- but it has warned that blocking the deal could damage the future of its 24-hour news network Sky News.

The submission echoes recent remarks made by News Corp. Europe and Asia CEO James Murdoch, who is also chairman of BSkyB, who last week told an investor conference in Barcelona that Sky might scale back its investment in the U.K. and cost British jobs if the government blocked the deal.

In a submission to the media regulator Ofcom, which was published on the satcaster's website Tuesday, BSkyB warned that far from protecting news plurality, any decision to block the deal could actually trigger a scenario where there was less incentive for BSkyB to expand and invest in its core assets like Sky News.

"[Sky's incentive to invest in news] has the potential to be undermined if merger control were to operate such that the operation of Sky News inappropriately or unduly restricted any merger or acquisition opportunities which may be available to Sky," the satcaster's submission said.

"Thus, a conclusion that the Transaction would result in a loss in plurality could perversely increase the risk of that very situation by undermining the incentives which have resulted in the provision of Sky News to date. This would be a wholly unwelcome outcome, contrary to the public interest."

News Corp. announced in June that it wanted to buy the 61% in BSkyB that it does not already own, and the deal has since been referred to the media watchdog by Business Secretary Vince Cable.

Opposition to the deal has been strenuous, with a coalition of newspapers publishers and broadcasters including the BBC uniting to criticize the deal, claiming it would give News Corp. too much power.

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