Rupert Murdoch’s News Corp’s chance of winning regulatory approval to buy British Sky Broadcasting Group got a boost after Conservative culture minister Jeremy Hunt was given responsibility for the review.
Business Secretary Vince Cable yesterday was stripped of the authority to decide whether the transaction gives News Corp too much power after he was quoted as saying he had “declared war” on Murdoch. Prime Minister David Cameron transferred that responsibility to Hunt, who earlier this year said that the range of voices in the media won’t change following the deal.
News Corp, the owner of four of the largest UK newspapers, in June offered £7.8 billion ($12.1 billion) for the remaining 61 per cent stake in BSkyB, the UK’s biggest pay-TV company. Media regulator Ofcom will report to the culture minister by December 31 on how the deal might affect British media and whether to refer the case to the Competition Commission.
“The odds of a referral have decreased significantly,” said Conor O’Shea, an analyst at Kepler Capital Markets in Paris. “There’s a major perceived change in the way that Jeremy Hunt views things as opposed to Vince Cable.”
BSkyB shares rose 2 per cent to 743 pence in London trading, the steepest gain since the offer was announced in June. BSkyB rejected News Corp’s initial 700 pence a share offer as too low. The companies are seeking regulatory approval before a new offer is made. News Corp won EU approval for the proposed purchase yesterday.
News Corp cancelled a proposed 2011 advertising campaign designed to win support for the takeover, former Sky TV chairman Andrew Neil said today on Sky News. A spokeswoman for News Corp declined to comment.
The likelihood of a deal going through after Cable’s “disastrous and very public implosion” increased to 90 per cent from 66 per cent, Investec Securities analyst Steve Liechti said today. Investec raised the target price for BSkyB’s stock to 793 pence from 700 pence.
“It does seem to me that News Corp do control Sky already,” Hunt said in an interview with the Financial Times after the bid was announced in June. “So it isn’t clear to me that in terms of media plurality there is a substantive change, but I don’t want to second guess what regulators might decide.”
