Nearly a year after News Corp. first made moves to acquire British Sky Broadcasting Group PLC, Rupert Murdoch’s media conglomerate has finally gotten the go-ahead for a takeover from the U.K. government provided that they make some concessions, reports the Wall Street Journal.
On March 3, U.K. culture secretary Jeremy Hunt gave provisional approval to the deal after News Corp. offered to spin-off BSkyB's 24-hour news channel, Sky News, into an independent listed company. Months of negotiations between News Corp., Hunt, and government regulators followed, and Hunt confirmed Thursday that he had agreed to let News Corp. continue with its Sky News plan to avoid further investigation by the U.K.’s competition regulator, but that he would require a “more robust set of undertakings,” says the Guardian.
These new measures include Sky News having an independent director with senior journalism expertise attend any board meetings where editorial decisions are made; requiring that Sky continue to cross-promote the 24-hour news service on its other channels; and appointing a monitoring trustee to make sure that News Corp. complies with these measures during the spin-off process. In addition, all of Sky News' articles of association will have to be approved by the culture secretary.
The deal's opponents, who fear that it will give Murdoch too much power over the local media industry, have been given a week to raise objections, but an approval looks likely now that government regulators have said that the proposal was sufficient to ensure media plurality.
If the deal is approved, News Corp. and BSkyB will only have to negotiate a price. But the longer the deal takes, the more expensive it will become for News Corp. thanks to BSkyB’s recent strong financial performance. There has been speculation that a deal could be reached at around 14 cents per share, costing News Corp. about $2.9 billion more than its original proposal of $12 billion. And because of an agreement that the two companies made last year, if a deal isn’t settled in five months, Murdoch will have to pay BSkyB another £38.5 million.