Today sees huge changes in the British media landscape. Jeremy Hunt, the UK culture secretary, has approved Rupert Murdoch’s controversial bid to buy the 61% of pay-TV broadcaster BSkyB he does not already own. Hunt has decided not to refer News Corp’s £7.5 billion bid to UK antitrust regulator the Competition Commission. News Corp has offered to spin off news channel Sky News into a separate company. Rival news organisations have complained that News Corp would control too many news outlets if it owns Sky News and newspapers. Murdoch has offered to keep the loss-making news channel going for another 7-10 years. Sky News loses around £20 million ($33 million) each year. This approval is quite a milestone in seeing Rupert Murdoch becoming even more powerful.
News Corp has offered to establish Sky News as a separate company with an independent board, much in the same way as The Times of London operates. News Corp will own 39% of the new Sky News. According to correspondence released this morning, this is a greater concession than News Corp had wanted to make.
There will be a storm of protest over Hunt allowing the deal to go through. Rivals including the BBC, Channel 4 and newspaper Daily Telegraph fear the influence News Corp wields over British media. Already Murdoch’s offer of an independent board has been greeted with gallows humour by Andrew Neil, the ex-editor of The Sunday Times who launched Sky News in 1989. “Rupert Murdoch would sell off his granny to buy BSkyB outright,” Neil told the BBC. “I always smile when I hear talk of his companies having independent directors. The Times’ independent directors have never exercised their rights and the independent directors on The Wall Street Journal have proved absolutely useless.
“When it comes to doing deals, Rupert Murdoch is an Italian. The real negotiations only begin after the government thinks the deal has been closed.”
Murdoch wants to buy the 61% of BSkyB News Corp doesn’t already own before the price rises any higher. The strengthening pound against the dollar means that the 700p per share News Corp has already offered – valuing BSkyB at £7.5 billion – would cost it 770p today, even if News Corp does not increase its bid. The Sky share price has rocketed this morning, rising to an all-time high of 815p.
While the chattering classes still regard Sky TV as slightly vulgar, despite it reaching out to upmarket viewers with its new Sky Atlantic HBO and Sky Arts channels, Sky News has become the premier news channel in Britain. The Royal Television Society named it best news channel for the second year running. The fear is that News Corp will now lose interest in the news channel, seeing that it is not part of the Sky family anymore. Sky News could be damaged as a brand, say observers I’ve spoken to. “As a viewer of Sky News, I hugely regret it being spun off,” said David Elstein, former BSkyB director of programmes and ex-CEO of Channel 5. “The irony is that Murdoch is the one who has supported Sky News’ losses through all these years. Would a spun-off Sky News be able to afford to be in high-definition or still carry all that terrific channel livery?”