LONDON â€” Battered by allegations of phone hacking by the now-shutteredÂ News of the World,Â Rupert Murdochâ€™s News Corporation on Monday effectively delayed government action on its proposed takeover of the satellite broadcast giant British Sky Broadcasting as the company scrambled to save the $12 billion deal from collapse.
The News Corporation announced that it was prepared to submit its offer for the 61 percent of BSkyB it does not already own to the countryâ€™s Competition Commission, an independent group that considers mergers and acquisitions within the United Kingdom. The company had previously offered to spin off the Sky News channel to avoid referral to the commission, but now says it wants to keep Sky News and take its chances with the regulator.
â€œNews Corporation is ready to engage with the Competition Commission on substance,â€ the company said in a statement, adding that it â€œcontinues to believe that, taking into account the only relevant legal test, its proposed acquisition will not lead to there being insufficient plurality in news provision in the U.K.â€
The announcement gives the deal some breathing room, avoiding an emergency vote called by the opposition Labour Party for Wednesday, when politicians were likely to have dealt a fatal blow to the acquisition. In the longer term, the commissionâ€™s lengthy review process, which could take up to eight months, could give the News Corporation some distance from the political fallout of the hacking scandal.
But the move also raises the question of just how much the News Corporation might balance the prospects of the BSkyB acquisition, which would be the largest in the companyâ€™s history, with its newspaper business.
Mr. Murdoch built the News Corporation on newspapers â€” his first love and still where he devotes most of his time and energy â€” but the tabloid scandal has become a hindrance to his more lucrative digital and entertainment properties. With The News of the World already shut down, many observers wonder whether Mr. Murdoch would stomach selling or closing more papers.
David Bank, a media analyst at RBC Capital Markets in New York, said it was a decision that would win approval from investors.
â€œInvestors would probably want nothing more,â€ he said. â€œItâ€™s the worst business in the portfolio.â€
But Claire Enders, a media analyst in London, said the News Corporation was still far from such a decisive move as jettisoning all of its British newspapers. â€œThe newspapers are very dear to Mr. Murdochâ€™s heart,â€ she said. â€œYou have also got to find a buyer for these things. They are barely profitable.â€
The Murdoch family â€œis in a bunker,â€ according to one person who is close to the company but declined to be identified discussing confidential matters. But, this person added, the idea of the News Corporation getting out of the newspaper business was very unlikely.
Shares in the News Corporation fell 7 percent on Monday. Since the scandal exploded last week, shares in the company have declined 11.4 percent; shares of BSkyB have fallen more than 15 percent.
Thomas Eagan, an analyst for the London-based company Collins Stewart, said the pullback in the BSkyB stock price could actually help the News Corporation â€œto get it cheaper than it otherwise would have.â€
To read more, visit:Â http://www.nytimes.com/2011/07/12/world/europe/12bskyb.html?_r=1
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