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

Published on Thursday 3 March 2011 17:10

RUPERT Murdoch's controversial takeover of BSkyB has moved a step closer, after the government backed plans to spin off Sky News as part of any deal.

Culture Secretary Jeremy Hunt said he was minded to wave through the takeover by News Corporation after it offered to make the channel into a separate independent company and subsidise it for a decade.

Opponents branded the undertakings a "whitewash", while Labour accused the coalition government of taking a "cavalier" approach to the media.

News Corp is attempting to avoid a full-blown inquiry into its bid to buy the 61 per cent of BSkyB it does not already own, after Mr Hunt said last month he planned to refer the deal to the Competition Commission.

The new conditions are subject to a 15-day public consultation period. An alliance of other media organisations has already indicated it will take legal action to block the deal.

News Corp has yet to agree a takeover price with BSkyB after an initial 700p-a-share bid, which valued the business at 12.3 billion, was rejected.

BSkyB investors are looking for 900p a share, but reports suggest the price Mr Murdoch is willing to pay is much lower.

Mr Hunt, who took his decision following advice from regulator Ofcom, said he was "very aware" of the controversy surrounding the deal.

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"Because I am very, very conscious that people are suspicious of the motives of politicians on a decision like this, I sought independent advice at every step of the way," he told MPs.

"Ofcom assure me that the undertakings that are being made do address the concerns that they had over plurality. After careful consideration, I have decided to accept their independent advice.

"I think News Corporation have moved a very long way. They are relinquishing significant control over the operation of Sky News. If (News Corp's] James Murdoch wanted to have greater control of the output of news in this country he would not have done this deal."

An Ofcom spokesman said it was pleased News Corp had agreed to "place editorial independence and integrity at the heart" of the spun-off Sky News and "underpin this with arrangements that secure full independent governance".

However, shadow culture secretary Ivan Lewis pointed out the decision came days after former Tory chairman Lord Patten had been selected as the government's preferred candidate to be chairman of the BBC Trust.

"Imagine what they would have said if we had made this decision in this way in the same week as we had put a former Labour Party chairman in charge of the BBC," Mr Lewis said."This process has exposed an arrogant government, cavalier about its responsibility to be impartial and contemptuous of the importance of transparency in circumstances where there is already a high level of public cynicism."

An alliance of media groups, including BT, Guardian Media, Associated Newspapers, Trinity Mirror, Northcliffe Media and Telegraph Media, has formed in opposition to the plans.

A spokesman for the alliance said: "Smoke and mirrors will not protect media plurality in the UK from the overweening influence of News Corporation.

"In addition, the undertaking does nothing to address the profound concerns that the takeover would give News Corporation greater power to restrict or distort competition through cross-promotion, bundling, banning rivals' advertisements and distorting the advertising market with cross-platform deals.

"We shall be vigorously contesting this whitewash of a proposal during the consultation period, as well as examining all legal options."