Feeds

Sky News spun out as BSkyB takeover OK'd, more or less

Rupe gets Hunt thumbs up

  • alert
  • submit to reddit

Build a business case: developing custom apps

News Corporation's buyout of satellite payTV operator BSkyB has been accepted in principle by the Culture Secretary, following advice from UK regulators Ofcom and the Office of Fair Trading. News Corp has agreed to spin out and fund the Sky News operation for 10 years.

Although the European Commission has said the buyout would not impede competition, an alliance of UK commercial rivals that vowed to stop the takeover, has hinted at legal challenges to the deal.

Culture Secretary Jeremy Hunt announced a consultation on media plurality issues raised by the proposed acquisition, declaring himself satisfied that the deal doesn't merit referral to the Competition Commission. Ofcom's advice [pdf] was based on a calculation that News Corp's reach would rise from 32 per cent to 51 per cent of consumers.

The nitty gritty can be found in this document. Sky News will be spun out into an independent publicly traded operation called Newco, with the same ownership shares it has today, with Sky owning 39.1 per cent. News Corp undertakes to pay for carriage for 10 years, and not touch the ownership arrangement for the same period. Sky News will receive a seven-year brand licence to carry on being called Sky News, and using the brand for related products and services. On Ofcom's recommendation, Newco will be overseen by an independent board.

News Corporation founder Rupert Murdoch cuts a powerful mythical figure among rivals and political opponents in the UK, and the takeover created a powerful alliance of rivals, including BT, DMGT (owners of Associated Newspapers), Trinity Mirror and the Guardian and Telegraph groups. "I have declared war on Mr Murdoch and I think we are going to win," Business Secretary Vince Cable boasted to undercover reporters, after he referred the merger to Ofcom.

But the myth is slightly undermined by the facts. News Corp posted a staggering operating loss of $5.6bn in 2009, on revenue of just $30bn. It ended the year with $6bn in cash, a fraction of the $30bn income that the BBC has been guaranteed, for example. The European Commission examined competition fears raised by the takeover and found them to be exaggerated. In its summary, the EC noted that newspaper subscriptions amount to only 6 per cent of the market, and that Sky's small share didn't allow it to hike advertising rates, or negotiate unfairly with European rights holders.

"What we are looking at is a complex, hybrid, potentially damaging solution that was never really necessary," former BSkyB's former head of programming David Elstein said today. ®

A new approach to endpoint data protection

More from The Register

next story
Amazon says Hachette should lower ebook prices, pay authors more
Oh yeah ... and a 30% cut for Amazon to seal the deal
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
Nintend-OH NO! Sorry, Mario – your profits are in another castle
Red-hatted mascot, red-colored logo, red-stained finance books
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Feel free to BONK on the TUBE, says Transport for London
Plus: Almost NOBODY uses pay-by-bonk on buses - Visa
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
prev story

Whitepapers

7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
A new approach to endpoint data protection
What is the best way to ensure comprehensive visibility, management, and control of information on both company-owned and employee-owned devices?