Bad timing

16 September 2010 By Una Galani Follow @ugalani

Revelations about illegal eavesdropping by one of the media group’s tabloids has drawn attention to Rupert Murdoch’s influence in the UK. That may complicate his $19 bln plan to take full control of the payTV operator. A drawnout regulatory enquiry looks increasingly likely.

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The UK government is expected to ask Ofcom, the media regulator, to examine News Corporation's proposed 12.3 billion pound takeover of British Sky Broadcasting, the BBC reported on Sept. 15.

Vince Cable, the UK business secretary, is likely to issue an intervention notice asking Ofcom to advise him whether the takeover would restrict the diversity and number of voices in the media industry, the BBC said.

News Corporation is expected within weeks to formally apply for approval from the European Commission for its takeover of BSkyB, according to a person familiar with the situation. The U.S. group already owns 39.1 percent of the business.

BSkyB on June 15 said that it had rejected a proposal worth 700 pence per share from News Corp, but added that it would recommend a higher offer worth in excess of 800 pence per share.

At the same time, BSkyB agreed to enter into a cooperation agreement with News Corp to seek regulatory approval in principle for a takeover in recognition of the fact that an offer from News Corp could be in the best interests of BSkyB shareholders in the future.

The UK Prime Minister's press chief, Andy Coulson, has been under pressure to resign following claims published by the New York Times on Sept. 1 that he encouraged reporters to illegally intercept phone messages in his previous role as an editor of News of the World, News Corp's UK tabloid newspaper.

The House of Commons on Sept. 9 voted to hold a fresh inquiry into the hacking affair over which two people were jailed in 2007. At the time of the original inquiry, Coulson said he was unaware of the newspaper's unlawful activities.

BSkyB shares closed at 712 pence on Sept. 15.

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