News Corp battles for BSkyB

A big chunk of News Corp’s argument that Ofcom’s been unreasonably severe in recommending referral to the Competition Commission is based on whether just because you get a news product from Sky News (like Channel 5 or IRN) doesn’t mean you’re getting Sky’s editorial judgment. The clients who buy in Sky’s product (and it’s the increase in this client base which has upped the company’s share of the market distinctly) have themselves retained control of their news product.

Here’s one of the relevant passages in the News Corp submission to Jeremy Hunt:

“3.3 Sky’s wholesale provision of news is not an activity of a “media enterprise serving a relevant audience” under the Enterprise Act and should therefore be disregarded.

“3.4 It is the controller of Channel 5 who is responsible for the content and editorial policy of Channel 5 news, regardless of the fact that the content is in practice, at this time, sourced by Channel 5 from Sky. The same applies to Sky’s wholesaling of news content to Independent Radio News (IRN). It is the radio broadcasters who remain responsible for their news content rather than Sky.

“3.5 Ofcom acknowledges this to some extent. It comments, at paragraph 2.20, that: ‘Sky’s provision of news…to other media enterprises may not, of itself, bring Sky within the definition of “media enterprise” for the purpose of the statutory test. However, it is relevant to the question of the contribution made by those other media enterprises to plurality. In any event, Sky…indirectly serves a variety of audiences besides its retail audiences, through wholesale news provision.’

“3.6 Later, Ofcom generally analyses data both including and excluding the wholesale supply of news, but in drawing its conclusions inevitably relies on the data which takes account of the wholesale supply of news by Sky News to Channel 5 and IRN. Indeed, in its analysis of cross-media consumption (key to its overall conclusions) it only presents its data including the wholesale supply of news.”

And in the same spirit here is what News Corp has to say about its editorial influence (zero, it says) over Sky News:

“4.2 News Corp already has a degree of commercial influence over Sky which results in “control” for Enterprise Act purposes, as recognised by a number of UK authorities. However, despite this degree of control over Sky, News Corp does not currently exert such control to influence editorial decisions of Sky News.

“4.3 The key question is, therefore, whether the degree of News Corp’s influence over Sky News’ editorial agenda would change as a result of the Transaction, and whether plurality would be compromised as a result. The answer is clear. Although the Transaction would result in an acquisition of full legal control over Sky, it will not change the fact that Sky News enjoys and will continue to enjoy editorial independence.”

Jeremy Hunt says he’s willing to consider “undertakings in lieu” – which could mean reassurances, concessions, understandings – that might convince him News Corp’s purchase of all of Sky can go ahead without referral to the Competition Commission. But what could these concession/reassurances amount to?

There have been rumours that they could amount to quite a lot – like a disposal by News Corp of Sky News. That doesn’t seem to be the spirit of the News Corp letter at all. The News Corp letter suggests it is looking more at “reassurances” that would be offered that News Corp was not dictating the content of Channel 5 News or IRN or Sky News.

If that was the extent of the “undertakings in lieu” and it turned Jeremy Hunt’s view, he would, in effect, have bought the News Corp line in their submission. That would be a different kettle of fish from getting a concession. Not a kettle of fish you can imagine Vince Cable (until recently the man in charge of media regulation) buying.