Ofcom Asked To Reconsider News Corp BSkyB Bid

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The culture secretary has written to Ofcom and the OFT asking for a fresh take on News Corp’s bid for BSkyB

News Corp’s takeover bid for BSkyB may be in doubt as a result of recent developments in the ongoing “phone hacking” scandal, with culture secretary Jeremy Hunt writing to media regulator Ofcom and the Office of Fair Trading (OFT) for a fresh assessment of the deal.

Hunt is writing to Ofcom and the OFT following the shutdown of News Corp’s 168-year-old tabloid News of the World on Sunday. Meanwhile, BSkyB shares fell to £7 in early trading on Monday, down 6.7 percent and back to the level they were at when News Corp originally made the bid.

Buyout at stake

Rupert Murdoch’s News Corp is looking to buy the 61 percent of shares in BSkyB that it does not already own.

However, the culture secretary is writing to ask Ofcom and the OFT whether the closure of the News of the World indicates that News Corp might not be a suitable owner for a broadcaster.

“I would be grateful if you could indicate whether this development (and/or the events surrounding it) gives you any additional concerns in respect of plurality over and above those raised in your initial report to me on this matter received on 31 December 2010,” Hunt’s letter reads, according to the BBC.

The letter asks whether the closure is causing Ofcom and the OFT to reconsider previous advice about the “credibility, sustainability or practicalities of the undertakings offered by News Corporation”.

Hunt told the BBC he was “trying to give the public confidence that I am doing this fairly and impartially”.

There is growing pressure from public opinion for the deal to be reconsidered, with the chairman of the media select committee, Tory MP John Whittingdale, reportedly recommending the deal to be put on hold in the present “poisonous atmosphere”.

News Corp criticism

Some industry observers said News Corp could even lose its current stake in BSkyB if it is no longer considered to be a “fit and proper” owner of a broadcasting licence by Ofcom.

Panmure Gordon stockbrokers told The Telegraph it is currently assessing the deal as 10:90 against, or “all but dead”.

Meanwhile, the government took further steps to avoid being seen to be supportive of News Corp, with Deputy Prime Minister Nick Clegg speaking of the “revulsion” felt by the public at allegations that The News of the World had accessed the mobile phone of murdered schoolgirl Milly Dowler in 2002.

“Rupert Murdoch is now in town in London seeking to sort things out,” Clegg said, according to the BBC. “I would simply say to him, ‘look how people feel about this, look how the country has reacted with revulsion to the revelations’. Do the decent and sensible thing, and reconsider, think again, about your bid for BSkyB.”

Inquiries into the current state of mobile phone security by eWeek Europe UK has indicated that the incidents of “phone hacking” are most likely a thing of the past.

Ofcom’s powers may be diminished by the forthcoming Communications Bill, with members of the UK communications industry calling on the government to avoid heavy-handed regulation that could stunt future growth and innovation in the sector.

Speaking at a Westminster Media Forum in London earlier this month, Google’s head of UK public policy, Sarah Hunter, said that the new bill should “protect the open platforms that the Internet has, and that content providers need”. She said that, in particular, the government needs to take a “sensible approach” to data protection, so as to preserve the open nature of the Internet.

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