Sky News spin-off to seal BSkyB deal

News Corp has offered to spin off Sky News to address concerns over its planned takeover of BSkyB.

Culture Secretary Jeremy Hunt has provisionally accepted the plan, meaning he will no longer refer the deal to the Competition Commission as he had previously outlined.

He said he had launched a consultation on the undertakings from Mr Murdoch‘s News Corp, but he intended to accept them, paving the way for News Corp to take over the 61 per cent of BSkyB it does not already own.

I have been very aware of the potential controversy surrounding this merger. Nothing is more precious to me than the free and independent press. Culture Secretary Jeremy Hunt

In a statement, Mr Hunt said: “I believe that these will address concerns about media plurality should the proposed News Corporation/BSkyB merger go ahead. The undertakings offered would ensure that shareholdings in Sky News would remain unchanged, and indeed offer it more independence from News Corporation than it currently has.

“Throughout this process I have been very aware of the potential controversy surrounding this merger. Nothing is more precious to me than the free and independent press for which this country is famous the world over. In order to reassure the public about the way this decision has been taken I have sought and published independent advice at every step of the way, even when not required to do so by law. And I have followed that independent advice.”

Deal

Rather than sell Sky News outright, News Corp has offered to make Sky News an independent public limited company. The shares in that company would be distributed amongst the existing shareholders of BSkyB in line with their shareholdings, meaning News Corp would still hold a 39.1 per cent stake.

But to ensure editorial independence, News Corp pledged today the company would have a board made up of a majority of indepdent directors, including an independent chair; and a corporate governance and editorial committee also made up of independents, with no other News Corp interests.

'Stakes are doubly high'
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, writes Business Correspondent Siobhan Kennedy.

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. 

Mr Murdoch’s empire would also have to ask permission from the Secretary of State if it wanted to increase its shareholding in the new company.

News Corp will continue to support Sky News, which is a loss-making channel – the Secretary of State said there would be a “ten year carriage agreement and a seven year renewable brand licensing agreement to ensure its financial viability – measures considered by the regulators to be long term in the rapidly-changing media sector.”

Mr Hunt will now consider responses to the consultation over the terms of the deal. He said that if he remains of the same view that this offer addresses concerns over plurality, he will accept it and not refer the merger to the Competition Commission, giving it the green light.

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