WILL OFCOM STAND UP TO SKY ?

nder U.S. Law Sky would not be able to own so much Media , why should we allow Murdoch so much power?

Sky makes case for News Corp bid

BSkyB's board of directors has warned that any attempt to block News Corp's proposed takeover of the UK satcaster may result in it investing less in Sky News and would therefore be "contrary to the public interest."

Sky, in which News Corp already holds a 39.1% stake, said yesterday in a submission to UK media regulator Ofcom that News Corp's planned buy-out of the remaining 60.9% "could be in the interests of Sky shareholders."

The company is therefore working with News Corp in "obtaining any necessary merger clearances (that) would facilitate such an offer."

As part of this process, Sky has put its case to Ofcom after the UK government earlier this month instructed the regulator to examine the matter - a process that was initiated after News Corp sought approval from the European Commission on competition grounds to proceed with its takeover attempt.

In its Ofcom submission, made public yesterday, Sky went to great pains to point out the boundaries of the UK regulator's remit, reminding it that it was only to investigate the proposal in terms of its impact on media plurality in the country.

News Corp owns News International, which publishes newspapers including The Times and The Sun in the UK. The company's £7.8bn (US$12.4bn) offer in June for the outstanding Sky stake therefore alarmed a number of media groups, including Channel 4 and the BBC, who raised fears that such a deal would reduce diversity in UK media.

While the Sky board rejected that offer as too low, it is still keen to leave the way clear for a higher bid if News Corp is prepared to make it. To that end, it yesterday made the case that there would be minimal if any impact on media plurality should the takeover go ahead, since the only real overlap between News International and Sky was the Sky News channel.

"Sky has invested for many years, and continues to invest, in the operation of Sky News as a distinct, impartial and independent news service, despite the unattractive returns available from such investments given the presence (among other services) of publicly funded rivals such as BBC News," the company said.

But it added that should Ofcom consider its operation of Sky News a barrier to News Corp's proposed takeover then it might reappraise its investment in the channel in order to move the bid forwards.

"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," said Sky.

The company also reminded Ofcom that the "appropriate focus" of its investigation was only national news, rather than broader content genres such as entertainment, fiction or drama. Rival media companies fear that News Corp might look to bundle in online newspaper subscriptions as part of Sky pay-TV packages, but Sky's Ofcom submission again stressed that any competition issues were a matter for the EC.


Jonathan Webdale
23 Nov 2010
© C21 Media 2010

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