Sky News ‘for sale’ as Murdoch eyes BSkyB deal

News Corporation’s reported sell-off of Sky News is believed to have been tabled as a compromise as it attempts to get the green light for its proposed takeover of all of British Sky Broadcasting (BSkyB).

As well as putting the programme up for sale, Mr Murdoch’s company is reportedly offering to subsidise the loss-making channel for a number of years: an annual £20 million the figure being touted around.

The sell-off could result in a Jeremy Hunt, the Culture Secretary, finally allowing the sale of BSkyB – a £7.5bn bid to buy the 61 per cent News Corp doesn’t already own.

Media commentator Steve Hewlett said he was “in principle, not surprised: it’s a possibility that has been canvassed publicly for a number of weeks now”.

But he said the offer to sell Sky News does throw up a gamut of issues that would have to be resolved if Mr Murdoch’s designs on BSkyB are allowed to progress by the Minister.

“The scenario I would be interested in seeing is if nobody comes in to buy Sky News,” he added. “Is the offer to sell good enough for Ofcom, who have long had a plurality issue, editorially speaking, with Murdoch’s empire? They will have to persuade Ofcom that it is a robust enough deal to avoid being referred to the Competition Commission, which is still a strong possibility notwithstanding.

“Interestingly, News Corp could potentially get the green light for the BSkyB deal and retain Sky News if there is no buyer.”

“Of course, this is all premature, because we don’t know if the offer is for the Sky News channel or for the entire production operation: this will have a bearing on what happens next. As a result nothing will happen overnight, as is being reported. There are other issues: for example, any sell-off of Sky News would have to contain an agreed closedown cost.”

He added: “Looking to the future, there is also the longstanding issue of persuading the 61 per cent of BSkyB shareholders to sell. The original offer was for just shy of £7 billion, but figures being bandied around are suggesting it will have to be £8.5b plus. This has to be resolved.”

But Mr Hewlett described the reports as “potentially deal making”, adding: “Without knowing the details, in principle, I suspect the offer will probably be enough to see the deal go through.”

Ofcom was concerned that News Corp’s newspapers – The Sun, The News of The World, The Times and The Sunday Times – along with the 24-hour rolling news channel would present Mr Murdoch with too much editorial power.

Business Correspondent Siobhan Kennedy takes us through the complications of any proposed deal for Sky News

Jeremy Hunt, the culture secretary, could signal the green light for News Corp's takeover of the remaining shares in BSkyB it doesn't already own as soon as tomorrow. It would certainly be seen as a U-turn for the Culture Secretary who in January said he was minded to refer the bid to the Competition Commission - a process that would have kickstarted a lengthy six-month consultation and could have derailed the bid altogether. 

The precise details of the remedy are not yet clear, but what is clear is it will involve a "hiving off" of the loss-making Sky News. The question is will Sky go the whole hog and offer to sell it to a rival? It seems more likely that Sky will want to ring-fence its news channel as an independent trust, one that it will fund but which will be editorially independent and at arms length from the rest of Sky. That's very different to an out and out sell, to a rival such as CNN or even ITN, which makes Channel 4 News. 

Sky declined to comment tonight but one source said the idea that Sky would effectively pay a rival to take Sky News off its hands was something that "I don't recognise". It could be that the source is splitting hairs and simply does not want to concede that in hiving off Sky News, Sky is effectively selling it off and that rivals will be free to bid for it. But if the past is anything to go by, Rupert Murdoch's been here before, his remedy, in the case of The Times/Sunday Times and the Wall Street Journal, has been to promise editorial independence in return for winning his prize. 

And in each case, his reassurances have been enough to keep ministers happy. 

But the stakes are doubly high in this deal. Not least because Vince Cable was effectively forced to resign the media portfolio of his ministry after declaring war (off camera) with Rupert Murdoch and making clear he intended to block the deal regardless. One Liberal Democrat source said tonight that if Jeremy Hunt now waves the deal through - having previously said he was minded to refer it - that would represent a "sellout and a disgrace". 

Murdoch's competitors would think the same way too. The group - including the Telegraph, the Daily Mail and the Guardian - that wrote initially to Vince Cable to oppose Murdoch's BSkyB bid, said tonight that the setting up of a trust would be "completely unacceptable" and they would keep their options open including a looking at a possible judicial review