Martin Flanagan: Sky's the limit now as Hunt gives takeover green light

Published on Wednesday 2 March 2011 21:17

AS EXPECTED, Rupert Murdoch has offered to spin off Sky News to hopefully win the bigger prize of BSkyB. And also as expected, the sprat to catch a mackerel has won the approval of Culture Secretary Jeremy Hunt.

So far, so normal in the traditional relationship between Britain's biggest media mogul and whatever the government of the day happens to be.

That relationship, say critics, is encapsulated by any government's determination not to cross Murdoch's News Corporation unless absolutely necessary.

David Cameron's coalition government seems to subscribe to this view in the same way as the increasingly dysfunctional Blair/Brown New Labour administration did.

The media alliance opposing the extension of Murdoch's empire to include full ownership of BSkyB has criticised the undertakings as a "whitewash". That was expected as well.

It might provoke a legal challenge by the rival media owners.

Perhaps most surprising is that under the regulatory trade-off to alleviate - certainly not allay - competition concerns, News Corp gets to retain its proportionate 39 per cent stake in the lossmaking Sky News, even though the demerged business will have its own independent board of directors and independent chairman.

A number of the usual media heavyweights have been mentioned as runners and riders for the Sky board but quite a few might find it impossible to take on such a role because they have spent many years going head to head with Sky News.

• Government whitewash row over backing for Rupert Murdoch's BSkyB deal

• Sam Hart: Murdoch has had to follow strict rules

• Q and A: BSkyB takeover

Without the spin-off of Sky News, the Culture Secretary would have been forced to refer News Corp's bid for the satellite broadcaster to the Competition Commission, as he said he was minded to do a month ago. A month is a long time in politics.

One suspects Lib-Dem Business Secretary Vince Cable would have referred it even with the demerger undertaking.

But the poisoned media plurality chalice was passed to Hunt after Cable's impartiality towards the Murdoch organisation was impugned by the infamous constituency meeting "sting".

The OFT and broadcasting regulator Ofcom are satisfied the undertakings will address concerns that News Corp acquiring BSkyB (and Sky News) would unacceptably reduce diversity in the UK news sector.

But yesterday's decision by Hunt, now subject to consultation for barely a fortnight, is obviously a victory for Murdoch senior.

News Corp has the chance of getting full ownership of BSkyB, with all the potential for distorting the advertising market through cross-promotion and bundling between the TV broadcaster and Murdoch's British newspaper titles.

And he gets to retain the stake he had in Sky News all along.

Now the game moves on to how much BSkyB's independent directors will accept from News Corp having rejected the 700p sighting shot.

JJB has a sporting chance but maybe not much more

THE war of words at dead-sportswear-shirt-walking JJB Sports will continue despite the group finally producing details of its second company voluntary arrangement to stop it going into administration in the past two years.

JJB, flailing behind more successful rivals like Sports Direct and JD Sports (which is considering a takeover bid for JJB), wants to close 40-odd poorly-performing stores by April 2012.

It also wants the option to close a further 46 stores by April 2013, pay 50 per cent less rent on all these properties before the shutters go up, and pay rent monthly rather than quarterly on all its stores.

Many would say it has got its creditors, including landlords, as well as its shareholders, who have to approve the changes, over a barrel.

What would creditors get back in the pound if JJB goes into administration? Two or three pence perhaps?

The company, meanwhile, has recently received a capital lifeline of 31.5m from shareholders, who include billionaire Bill Gates, but has warned that it will need another bigger one.

A sorry business.