News Corp. Moves Closer to BSkyB Deal as U.K. Accepts Independence Pledge
Rupert Murdoch’s News Corp. moved closer toward its takeover of British Sky Broadcasting Group Plc (BSY) after the U.K. government accepted plans to carve out Sky News as a separate company with additional conditions.
News Corp. will nominate a monitoring trustee to oversee the spin off process, and the Sky News board meetings must include an independent director with senior editorial or journalistic experience for decisions on editorial issues, U.K. Culture Secretary Jeremy Hunt said today. A new consultation will run until July 8.
“I could have decided to accept the original undertakings but a number of suggestions were made in response to the consultation which could further strengthen the undertakings,” Hunt said in a statement, as the government published the results of a consultation on earlier pledges.
Final government approval would clear the way for price negotiations over News Corp. (NWSA)’s 7.8 billion-pound ($12.5 billion) bid for the 61 percent of the pay-TV operator it doesn’t already own. News Corp., which owns four of the U.K.’s largest newspapers, has up to two months after winning regulatory clearances to negotiate the agreed offer.
News Corp. faces opposition from rivals who say full ownership of the U.K.’s biggest pay-TV operator would give Murdoch too much power. The government said today it received more than 40,000 responses to its initial consultation.
“I don’t think anyone anticipated that there’d be 40,000 responses to the first one and it would take as long to get through them as they did,” said Paul Richards, an analyst at Numis Securities in London. “If there are a similar number of replies again then it could take really some time.”
Enders Analysis said in a research note this week said it expected regulatory barriers to be cleared in July, with a purchase concluded by the middle of October if News Corp. and BSkyB can agree on a price.
Avaaz, an advocacy group that organizes campaigns for citizens, said in a statement today that it may seek permission for a judicial review of the government decision.
Sky must continue to cross-promote Sky News as a public limited company on its channels, Hunt said today. News Corp. said it would continue to cooperate with the regulatory process.
“We will continue to engage constructively with the regulatory process,” News Corp. said in a statement today.
Murdoch may have to raise his 700 pence-a-share bid, which was rejected last June by independent directors as too low, to win over shareholders, investors including Odey Asset Management and Westchester Capital Management Inc. have said.
BSkyB was little changed at 848 pence at 9:03 a.m. in London, giving the company a market value of 14.9 billion pounds. The shares have gained 15 percent so far this year. News Corp. added 1.3 percent yesterday to $17.39 in New York.