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NEW YORK – News Corp.’s planned acquisition of full control of U.K. pay TV firm BSkyB could potentially be delayed by another year or more, BTIG analyst Richard Greenfield said in a blog post Friday afternoon.
He also said News Corp.’s stock may need a full year to hit his target price of $24 as the investigation may take a while and it remains unclear which company executives will be affected by it.
“We continue to believe News Corp. will ultimately end up acquiring 100 percent of BSkyB, however, we could envision the transaction taking another year or more to occur,” Greenfield wrote. “While it is factually correct that News Corp./BSkyB could proceed if the government formally approves its revised undertakings in fall 2011, we are concerned that the situation has gotten so sensational (public outrage), that the deal may need to wait for government investigations to conclude before moving forward.”
He added: “We believe it is prudent to assume a long approval process at this point given our fear of what we do not know and what may or may not come out next, including what Andy Coulson knows and how far up the News Corp. executive ladder current revelations will lead.”
Greenfield used the title “Conspiracy Theories and Other Very Bad Things” for his blog post. “The news flow in the News Corp./BSkyB takeover bid increasingly reminds us of a cross between the 1998 dark comedy Very Bad Things and an Oliver Stone movie – with every scene/datapoint getting worse by the minute and pointing to an interconnected web,” he said. “We also cannot help but feel like there is some level of scripting to how this has all played out.”
Greenfield pointed out that the end of the week marked the end of the second consultation period for public comments on the proposed deal, with U.K. Culture Secretary Jeremy Hunt expected to approve it within days and enable News Corp. to begin negotiating with BSkyB over price. “Can it really be sheer coincidence that the phone hacking scandal from years ago has exploded in the past few days with it becoming apparent that the scope of wrongdoing was far wider than previously known, that Andy Coulson was arrested today, and that News of the World is being shuttered Sunday?” Greenfield asked.
His take: “It honestly feels like there were opponents of the News Corp./BSkyB transaction that realized there was simply no way to block the deal on “media plurality” grounds, so in turn, they unearthed a wide array of illicit activity at News International to throw a “wrench” into the acquisition process.”
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