News Corp. formally asked the European Union to approve its proposed takeover of pay-TV provider British Sky Broadcasting Plc, starting a regulatory process that may end up in U.K. hands.
News Corp. made the request in a notification to EU antitrust regulators at the European Commission in Brussels, said Jonathan Todd, a spokesman for the agency. The commission set a Dec. 8 deadline for reviewing how the deal might affect competition in the 27-nation EU’s media market.
The notification is a sign that the EU watchdog “is satisfied that it has sufficient information to start the formal process,” said Jenine Hulsmann, a lawyer with Clifford Chance LLP in London. “They will still continue to speak to any third parties that have issues.”
The EU filing sets the clock ticking for U.K. regulators to decide whether to raise objections to News Corp. Chief Executive Officer Rupert Murdoch’s attempt to gain from the steady subscription business of Britain’s biggest pay-TV operator. BSkyB in June rejected an initial 7.8 billion-pound ($12.6 billion) bid for the 61 percent of the company that News Corp. doesn’t already own, saying it was too low.
U.K. Business Secretary Vince Cable has authority to intervene in transactions based on concerns about media plurality and the dissemination of information to the public. If Cable decides to step in, he will ask Ofcom, the U.K. media regulator, to examine the case and make recommendations.
“With all the rhetoric that we have seen, Cable is going to request that it be referred to Ofcom,” said Will Smith, an analyst at Jefferies International Ltd. “It will just be a political liability if he doesn’t.”
Under government guidelines, Cable must aim to decide within 10 working days.
“This is an important issue which the Secretary of State will consider carefully,” Cable’s office said in an e-mailed statement.
Britain’s Office of Fair Trading may also attempt to wrest jurisdiction over the approval process from the EU agency within 15 working days of the notification.
OFT spokesman Frank Shepherd said the U.K. watchdog hasn’t received notification. “It is too early to say whether we would be seeking to have the case referred back,” Shepherd said today in an e-mail.
The commission can cede jurisdiction to local regulators over the whole or parts of a deal if it accepts arguments that they are better placed to conduct probes.
U.K. newspapers and the British Broadcasting Corp. in October sent a joint letter to Cable asking him to block News Corp.’s bid, saying it harms the public interest and will have “far-reaching consequences for media plurality.”
BSkyB fell 2.5 pence to 707.5 pence at 3:14 p.m. in London trading. News Corp. climbed less than a cent to $14.60 in Nasdaq Stock Market trading.
News Corp., the owner of The Wall Street Journal and the Twentieth Century Fox film studio, owns Britain’s biggest tabloid, the Sun, which backed the Conservative party of Prime Minister David Cameron in Britain’s general election. It also owns the Times and Sunday Times newspapers.
News Corp. Chief Operating Officer Chase Carey said in a June conference call that the process may take at least six months and wouldn’t require a competition review of its newspapers and other media holdings in the U.K.
Premier League Soccer
Formed in 1990 with the merger of Murdoch’s Sky Television and British Satellite Broadcasting, BSkyB has about 10 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.
In June, the companies failed to agree on a price for the deal and said they would focus on gaining regulatory approval first.
Attorneys generally agreed News Corp.’s bid for full control of BSkyB will eventually win approval because Murdoch already owns 39 percent of the broadcaster and his influence on the company is already in place.