News Corporation Moves to Delay BSkyB Deal to Avoid Its Collapse

by
July 12, 2011
By  and , The New York Times

LONDON — Battered by allegations of phone hacking by the now-shuttered News of the World, Rupert Murdoch’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 country’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.

“News Corporation is ready to engage with the Competition Commission on substance,” the company said in a statement, adding that it “continues 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.”

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 commission’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 company’s history, with its newspaper business.

Mr. Murdoch built the News Corporation on newspapers — his first love and still where he devotes most of his time and energy — 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.

“Investors would probably want nothing more,” he said. “It’s the worst business in the portfolio.”

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. “The newspapers are very dear to Mr. Murdoch’s heart,” she said. “You have also got to find a buyer for these things. They are barely profitable.”

The Murdoch family “is in a bunker,” 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 “to get it cheaper than it otherwise would have.”

To read more, visit: http://www.nytimes.com/2011/07/12/world/europe/12bskyb.html?_r=1

 

No comments yet - you can be the first!

Leave a Reply

Your email address will not be published. Required fields are marked *

?>

Keep the Fake News Media in check.

Don’t let the MSM censor your news as America becomes Great Again. Over 500,000 Americans receive our daily dose of life, liberty and pursuit of happiness along with Breaking News direct to their inbox—and you can too. Sign up to receive news and views from The 1776Coalition!

We know how important your privacy is and your information is SAFE with us. We’ll never sell
your email address and you can unsubscribe at any time directly from your inbox.
View our full privacy policy.

Facebook Auto Publish Powered By : XYZScripts.com
Google Analytics Alternative