A major question swirling around News Corp since last week’s announcement that the company will divide itself in two has been whether another run will be made at the 61% of British satcaster BSkyB that News Corp does not already hold. UK regulator Ofcom is currently weighing whether News Corp is fit to own a broadcast license at all in light of the phone-hacking scandal at its UK print business. And, although the org isn’t commenting publicly, I understand that News Corp’s intent to divide may be taken into consideration for the “fit and proper” test. All information and evidence that’s available will continue to be assessed as the process is ongoing, I’m hearing. There is no time frame for Ofcom’s decision, but contrary to some reports, no announcement is expected before the Olympics later this month.
Although News Corp chief Rupert Murdoch told Fox News last week, “We’ve moved on in our thinking….I’m much more bullish about America,” Panmure Gordon media analyst Alex De Groote tells me he thinks another attempt to acquire BSkyB will happen “two to three years down the line.” He calls the move to split News Corp “tactically quite shrewd” as it detaches the tainted UK print assets from the entertainment division. But, he says, “Even if phone hacking had never happened, shareholders would have legitimately pushed” to separate the businesses. De Groote calls it getting away from what’s known as “the conglomerate discount”, which reflects the difference between what a conglom’s holdings are worth and the real value the market places on the whole. He adds that “Everything is about survival in the long term. In the short term, it’s sacrifice the British newspapers and everybody who gets in the way. The long term is preserving the Murdoch family and the medium term is to get BSkyB.” (more…)