Murdoch to lead Sky bid negotiations
News Corp chief cancels visit to Davos to personally lead talks over BSkyB buyout, which could include guarantees on Sky News
Rupert Murdoch cancels Davos visit to negotiate over Sky buyout
Murdoch's News Corporation has offered 'undertakings' of independence for Sky News which the culture secretary is considering
Rupert Murdoch today chose to cancel his visit to the Davos global economic summit in order to personally lead negotiations with the culture secretary, Jeremy Hunt, in an effort to get News Corporation's £8bn buyout of Sky approved by offering guarantees to safeguard Sky News's independence.
Yesterday morning Hunt said he considered that News Corporation's buyout of the 61% of BSkyB it did not already own might "operate against the public interest in media plurality"; for that reason he intended to refer the matter to the Competition Commission.
But in a surprise move, the culture secretary said he would consider an undertaking from News Corp that the company "could sufficiently alleviate the concerns" he had, allowing him to accept its undertakings rather than make a reference to the commission.
It is understood that any promises made by News Corp would concern an offering of editorial guarantees on the independence of Sky News, although the former refuses to contemplate a sale of the 24-hour channel.
The move sets the stage for several weeks of direct negotiation between Hunt, who will be advised by the Office of Fair Trading, and News Corporation at a time when Murdoch is in London. Hunt's team said that its decision was motivated by a desire to be seen to be fair to all parties, and avoid a legal challenge by News Corp or the alliance of newspapers, including the Guardian, that has opposed the bid.
But critics argued that it made it easier for Hunt to reach an agreement with Murdoch. Claiming that Hunt should simply heed the advice of Ofcom, Ivan Lewis, the shadow culture, media and sport secretary, said: "The right thing to do is to refer the bid to the Competition Commission … instead [he] has chosen an unprecedented course of action, which raises further doubts about the integrity of the process."
But Don Foster, the senior Liberal Democrat MP who was the party's frontbench culture spokesman in the last parliament, praised Hunt's handling of the matter.
Foster said: "I genuinely believe that Jeremy Hunt has adhered strictly to the rules that are laid down in the enterprise act to deal with these matters and that we must now await the comments from Ofcom to the mitigation proposals from News Corp. That is the correct procedure and it would be wrong to suggest otherwise."
"Ofcom can come to two conclusions. They can say that News Corp have come up with good ideas that may solve the plurality problem. There would then have to be widespread consultation on these. If Ofcom says it does not think News Corp's ideas would have a major benefit then I would expect the secretary of state to refer the matter to the Competition Commission."
Ofcom concluded a combination, with Sky, of News Corporation's newspapers, the Sun and Times, would give the company a 22% share of news consumption in the UK. That would put it second only to the BBC, which accounts for 37%, and well in excess of the 10% held by ITN, which supplies news to ITV and Channel 4.
News Corp hit back at Ofcom's analysis, saying, in a 216-page rebuttal, that it believed Ofcom had failed to consider the Murdoch bid "with an open mind".
The company also said it believed the entire regulatory process was "seriously flawed" because the decision to refer the bid to Ofcom was made by Vince Cable, the business secretary, who was stripped of his role in overseeing it when he told Telegraph journalists before Christmas that he had "declared war on Murdoch".
News Corp, it emerged, had also demanded that Ofcom release all the correspondence it had with Cable and his department, in what was widely seen as an evidence-gathering exercise in advance of any judicial review should the company fail to get what it wanted.
Ofcom published the letters, although regulatory sources insisted they "showed nothing interesting".
An Ofcom spokesman hit back at News Corp, saying the regulator stood by its report, "a rigorous, thorough and independent assessment of the issues". The spokesman added: "News Corporation's response makes … assertions of purported errors by Ofcom in its report. Ofcom entirely rejects this analysis and we refer to our report for a clear, accurate and independent assessment of the public interest issues."
News Corp, however, said it had won on two points. Ofcom concluded, insiders said, that media plurality amounted only to the choice and provision of news; and the regulator set aside worries about whether News Corp newspapers could enjoy an unfair advantage if they were "bundled" in with a Sky subscription, whether in print or online.
The regulator also admitted that it was unable to consider how News Corp and the fast-growing Sky would behave in the future, saying that there was "no mechanism" for the regulator to consider what might occur in the future.
In a joint statement, BT and the companies behind the Guardian, Daily Mail, Daily Mirror and Daily Telegraph said it was a matter of regret that the secretary of state had "not followed the advice of the independent regulator".
The group added: "The process outlined today is unprecedented.
We are particularly concerned that parties other than News Corporation will not have the opportunity to put forward their case until after the secretary of state has come to a decision on proposed remedies."
