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Sky News to be sold by BSkyB? — 3 Comments

  1. Rupert Murdoch has agreed to sell off the loss-making Sky News.

    The move is likely to be enough to win government approval for the takeover of BSkyB by his News Corp firm, the BBC’s Robert Peston understands.

    News Corporation has offered to sell Sky News and also subsidise the channel for years, to allay concerns about News Corp’s planned takeover of all of British Sky Broadcasting.

    Ofcom was concerned that the combination of News Corp’s market-leading newspapers with BSkyB’s 24-hour rolling news channel, Sky News, would reduce plurality or choice of news for citizens.

    So in what News Corp sees as a significant concession and sacrifice, it has offered to sell Sky News. And because Sky News is lossmaking – to the tune of more than £20m a year according to sources – it has also offered to in effect cover the costs of Sky News for many years through a long-term contract.

    Bankers tell me that with such a long term contract in place from BSkyB, Sky News is capable of being sold.

    “Some will see that as a U-turn,” said Mr Peston, as Culture Secretary Jeremy Hunt had promised to heed the advice of regulator Ofcom, who wanted the deal referred to the Competition Commission.

    Mr Hunt is expected to require a 15-day public consultation of the takeover.

  2. Breaking News:

    Sky News to become a seperate company and to ensure Editorial independance, seperate from BSkyB. This allows the News Corporation take over of BSkyB in a proposed £8bn purchase of the 61% of BSkyB it does not already own.

    Under the deal the loss-making news subsidiary will be spun-off into a new publicly-listed company, currently named NewCo, and will be independently funded for 10 years. News Corporation is to licence the Sky News brand to the operation for seven years, providing an incentive to renew a second funding deal.

    News Corporation will have a 39.1% stake in the venture with the other shareholders made up of existing investors in BSkyB.

  3. News Corp’s BSkyB bid: Jeremy Hunt expected to give green light next week

    The culture secretary, Jeremy Hunt, is expected to give the final go-ahead to News Corporation’s proposed takeover of BSkyB early next week, after receiving a report on the deal from media regulator Ofcom on Wednesday.

    Hunt has been waiting to receive final reports on the regulatory issues relating to News Corp’s bid to buy the 60.9% of BSkyB it does not already own from Ofcom and the Office of Fair Trading.

    Hunt is expected to announce the deal will go through next week, although it is understood he is to put the decision out to a further seven-day consultation.

    He has previously indicated he is minded to approve the merger on condition that News Corporation agrees to spin off Sky News and restrict its shareholding in the channel to 39.1%.

    Although Ofcom has delivered its report to Hunt, the culture secretary is currently in Brazil with the deputy prime minister, Nick Clegg, as part of an official UK government visit.

    Hunt gave the deal a provisional green light in March and had been expected to announce his final decision by the end of April after putting it out to consultation.

    The delay in publishing a final approval for the takeover is due to make negotiations more intense on points of detail of the Sky News spin-off agreement between News Corp and Ofcom and the OFT, which have both been advising Hunt.

    Regulatory sources say they want to structure the legal agreement “so it cannot be got around” – an attempt to head off a perception that Rupert Murdoch has been successfully able to work around previous legal agreements he has signed designed to secure the editor’s independence at the point when the Times was acquired in 1981 and when the Wall Street Journal was bought in 2007.

    In both cases the agreements were designed to prevent the editor of both newspapers from easily being removed, but in practice editors at each title have come and gone largely at the behest of the owner.

    The long delay has frustrated Murdoch’s News Corp, which is keen to conclude the transaction at a time when BSkyB’s share price has been rising due to its strong financial performance.

    News Corp’s original proposal was 700p a share a year ago, but Sky’s share price was 830.5p on Wednesday. A final bid is thought likely to succeed at around 875p – costing News Corp about £1.8bn more than the original £7.5bn proposal.

    A string of media organisations, including the parent company of the Guardian, have opposed the proposed Murdoch merger, arguing it would stifle media plurality by bringing together the largest newspaper group, Sun and Times owner News International with a 37% share of all copies sold in the UK, and the largest broadcaster, BSkyB.

    Last year the fast-growing Sky had a turnover of £5.9bn, taking it comfortably ahead of the BBC.

    source: mediaguardian

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