News Corp. (NWSA)’s 7.8 billion-pound ($12.5 billion) takeover bid for British Sky Broadcasting Group Plc (BSY) faces a further delay after the U.K. government said it will take “some time” before it will give a final ruling, sending the broadcaster’s stock to its steepest decline since 2008.
A weeklong consultation on additional conditions imposed on Rupert Murdoch’s News Corp. over the deal ended at noon in London. The Department of Culture said it had received 156,000 messages of objection, as well as a written petition that it was informed had 100,000 signatures. The public reaction coincided with reports this week that a News Corp. newspaper hacked into the phones of murder and terror victims.
“Given the volume of responses, we anticipate that this will take some time,” the Department for Culture, Media and Sport said today, without specifying a timeframe. “The secretary of state has always been clear that he will take as long as is needed to reach a decision.”
Prime Minister David Cameron said today it is up to regulator Ofcom to decide whether News Corp. is “fit and proper” to take full control of BSkyB, adding that the takeover review will take some time.
“There are proper organizations and procedures,” Cameron said at a news conference in London. “It is very important that this is done in the proper way.”
While Culture Secretary Jeremy Hunt has said he is minded to accept the proposals, U.K. lawmakers have called for the bid to be halted pending a public inquiry. News Corp. said yesterday it would close the 168-year-old News of the World tabloid after allegations that its journalists tapped the voice mails of murder victims and paid police officers for stories.
BSkyB fell 62 pence, or 7.6 percent, to 750 pence in London for its steepest decline since October 2008, wiping almost 1.1 billion pounds off the stock’s value. The shares have fallen 12 percent since this week’s reports of the hacking allegations. News Corp. offered 700 pence a share in June last year.
News Corp., also owner of the Fox TV networks and film studios, the Wall Street Journal newspaper and book publisher HarperCollins, closed down 68 cents, or 3.9 percent, to $16.75 at 4 p.m. in New York in Nasdaq Stock Market trading.
Bloomberg LP, the parent of Bloomberg News, competes with New York-based News Corp. units in providing financial news and information.
“Our priority is to continue to cooperate with the secretary of state” in the existing regulatory process, News Corp. said in a statement.
In deciding on the bid, Hunt will consider “all relevant factors including whether the announcement regarding the News of the World’s closure has any impact on the question of media plurality,” the culture department said.
“No one ever expected this deal to go through smoothly,” said Alexander Wisch, an equity analyst at Standard & Poor’s in London, who doesn’t own the shares. “I was expecting the deal to go through in the second part of the year, maybe it will drag on a bit longer.”
News Corp. wants full control of BSkyB to gain access to the broadcaster’s increasing cash flow. BSkyB may also help Murdoch make News Corp.’s newspaper business more profitable by allowing him to bundle newspaper and pay-TV subscriptions and spread content over several media platforms.
Sky News Separation
James Murdoch, the 38-year-old son of Rupert Murdoch and deputy chief operating chief at News Corp., was CEO of BSkyB from 2003 to 2007 before he was tapped to run News Corp.’s European and Asian operations, including taking over as chairman of the News International U.K. publishing arm.
News Corp. has agreed to carve out the Sky News channel as a separate company. The just ended public consultation relates to additional undertakings including the nomination of a monitoring trustee to oversee the spin off process, and the inclusion of an independent director with senior editorial or journalistic experience for decisions on editorial issues at Sky News board meetings.
The 156,000 complaints were from Avaaz members in Britain calling on Hunt to block the deal, said Sam Barratt, a spokesman for the online political campaign group.
Should the U.K. government stand by its preliminary decision to clear the acquisition, News Corp. will start negotiations about its bid for the 61 percent of Isleworth, England-based BSkyB it doesn’t already own. BSkyB rejected the initial 700 pence a share offer, saying it wants at least 800 pence.
Ed Richards, CEO of the Ofcom regulator, wrote in a letter to the culture committee of the House of Commons that he’s monitoring closely the situation around the proposed takeover.
“It is not for Ofcom to investigate matters which properly lie in the hands of other authorities, such as the police and the criminal or civil courts, and clearly we cannot and should not act whilst allegations are unsubstantiated,” he wrote.
The four-year-old phone-hacking scandal at the News of the World that had so far centered on celebrities, politicians and sports athletes widened this week to include murder and terror victims. Former News of the World Editor Andy Coulson, who resigned as Cameron’s press chief in January, was arrested as part of a probe into phone-hacking at the tabloid paper, a person familiar with the matter said.
Responding to media reports that News International Chief Executive Officer Rebekah Brooks, a former editor of the News of the World, had offered her resignation over the phone-hacking scandal, Cameron said at the news conference at his office today: “In this situation I would have taken it.”
To contact the reporter on this story: Amy Thomson in London at firstname.lastname@example.org