News Corp., BSkyB Advisers May Lose $90 Million on Collapse

Advisers to News Corp. (NWSA) and British Sky Broadcasting Group Plc (BSY) are set to lose about $90 million in fees after News Corp. abandoned its 7.8 billion-pound ($12.6 billion) bid for full ownership of the U.K. TV service.

Rupert Murdoch’s News Corp. withdrew the offer for BSkyB following allegations that one of its publications, U.K. tabloid News of the World, hacked into cell phones to get information.

JPMorgan Chase & Co. and Deutsche Bank AG, which are advising New York-based News Corp., may lose a total of $45 million and BSkyB advisers Morgan Stanley, UBS AG and Bank of America Corp. may lose an equal sum, according to estimates by New York-based research firm Freeman Consulting. The firms will still earn the retainer fees, according to Lam Nguyen, vice president at Freeman.

“The banks typically get the retainer fee in advance, while the rest of their fees are paid after the deal closes,” he said.

News Corp. pulled its offer for the 61 percent of the U.K. broadcaster that it didn’t already own after more than a year battling for regulatory approval. The announcement preceded by two hours a U.K. parliamentary vote, supported by Prime Minister David Cameron, calling on Murdoch to abandon the deal. U.K. lawmakers said News Corp. needs to do more to atone for the misdeeds at his newspapers.

Spokesmen for Morgan Stanley, Deutsche Bank, JPMorgan and Bank of America in London declined to comment. A spokesman for UBS declined to comment.

Tabloid Shut

The phone-hacking scandal prompted Murdoch to close the 168-year-old News of the World and derailed the BSkyB takeover, which the government had indicated last month it would approve. It would have been the biggest media deal of the past 18 months, according to data compiled by Bloomberg.

BSkyB rose 13.5 pence to 705.5 pence in London trading. News Corp. Class A shares rose 58 cents, or 3.8 percent, to $15.93 as of 4 p.m. New York time in Nasdaq Stock Market trading. News Corp. has dropped 12 percent since July 5, the first trading day following reports that News of the World deleted messages from the voice mail of a murdered schoolgirl, prompting further allegations of illegal practices.

Some U.K. lawmakers, including Labour Party’s Chris Bryant, are calling News Corp. to take further action such as selling its newspapers.

“News Corp. has not been able to deal with criminality in its own organization and they shouldn’t have any media responsibility in this country,” Bryant said in a telephone interview in London today.

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.

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