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U.K. Newspapers Join BBC in Opposition to BSkyB Deal

U.K. Newspapers Join BBC Against News Corp., BSkyB Deal
A sign sits outside the British Sky Broadcasting Group Plc headquarters in Isleworth, U.K. Photographer: Chris Ratcliffe/Bloomberg

Oct. 12 (Bloomberg) -- U.K. newspapers and the British Broadcasting Corp. asked the government to block Rupert Murdoch-controlled News Corp.’s bid to take over the rest of British Sky Broadcasting Group Plc, saying it harms the public interest.

In a joint letter, the director general of the BBC and the owners of newspapers including the Daily Telegraph and the Guardian demanded that Business Secretary Vince Cable challenge the deal. The companies wrote that the takeover would expand News Corp.’s control of U.K. media outlets. The BBC, Guardian Media Group Plc, phone operator BT Group Plc and Channel Four Television Corp. confirmed sending the letter.

“We believe that the proposed takeover could have serious and far-reaching consequences for media plurality,” according to the letter posted on the Financial Times’ Alphaville website.

Murdoch’s News Corp. in June offered 7.8 billion pounds ($12.4 billion) in its initial bid for the 61 percent it doesn’t already own of BSkyB, the U.K.’s biggest pay-television operator. BSkyB rejected the offer as too little, and the final price of the deal won’t be negotiated until regulatory approval is received. News Corp. owns the Times, Sunday Times and Sun newspapers in the U.K.

BSkyB shares dropped 0.3 percent to 707 pence as of 12:52 p.m. in London. News Corp. declined 0.4 percent to $13.83 yesterday in Nasdaq Stock Market trading.

The objection may put the coalition government of Prime Minister David Cameron in a quandary. Murdoch’s newspaper the Sun, which is the country’s biggest tabloid, backed Cameron’s Conservative Party in Britain’s May general election.

‘Formidable Beast’

Cable, a member of the Liberal-Democrat party -- the Cameron government’s coalition partner -- led by Deputy Prime Minister Nick Clegg, has authority to intervene in deals over concerns about media plurality.

Pearson Plc’s Financial Times said in an editorial last month that Cable should examine the deal. The combination of News Corp. with BSkyB would create a “formidable beast,” which “might dominate the media scene, lock out challengers and stifle diversity of debate,” it said.

BBC Director-General Mark Thompson said in an interview on the “Charlie Rose” program that the deal raises “questions that should be looked at.”

“Given the scale of the potential ownership in U.K. media, there’s a strong case for looking at it systemically and deciding whether or not anything needs to be done to address the issue,” he said in the interview broadcast on Bloomberg TV.

Trinity Mirror Group Plc, the Telegraph Media Group, the Guardian, and BT, the U.K.’s biggest phone company, signed the letter. BT has expanded into TV services and offers BSkyB’s Sky Sports 1 and Sky Sports 2 at a discount.

Notification Needed

The U.K. Department for Business, Innovation and Skills has received the letter, a spokeswoman said, declining to be identified in line with government policy.

Cable can’t challenge the deal until New York-based News Corp. registers the proposed acquisition with the European Commission. Murdoch said on Aug. 4 that News Corp. would notify the commission “very shortly.”

The U.K. Office of Fair Trading can also review the acquisition based on concerns over domestic competition.

Formed in 1990 with the merger of Murdoch’s Sky Television and British Satellite Broadcasting, BSkyB has about 9.77 million subscribers. Buying exclusive live broadcasting rights in 1992 to popular events such as the Premier League, England’s top soccer league, helped it win clients. It added offerings such as the History Channel and Disney Channel in 1995.

BSkyB’s non-executive chairman is James Murdoch, Rupert Murdoch’s son.

To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net.

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