Rupert Murdoch gets his way with Sky News spin off
News Corp will become Britain's biggest media company at a fairly modest regulatory price. Now Murdoch has to actually complete the deal
Rupert Murdoch has pretty much got what he wanted from Jeremy Hunt. He will be allowed to take over all of BSkyB, in return for the relatively modest concession of being held back at a 39.1% shareholding in the newly independent Sky News Ltd. From a Sky News point of view that's pretty much the status quo - News Corp, after all, owns 39.1% of the whole of the Sky company today.
Essentially what is being created is another ITN (40% owned by ITV, since you asked). Come to think of it Sky News Ltd could continue to chase hard contracts for news supply at Channel 4 if not ITV. So Sky News is hardly suffering. And, given that television news is fairly tightly regulated by Ofcom the extra safeguards are only really reassurance that News Corp won't one day turn Sky News into Fox News Light, or Sun News. But then News Corp wasn't probably going to do that anyway.
What News Corp has got through is the ability to takeover the rest of Sky - creating a £7.5bn British media giant with access to the vast cashflows of the satellite broadcaster. The critics (including the company behind this newspaper) who warned that this enlarged News Corp would have the financial muscle to gradually steamroller rivals have not been heeded - and the fact remains that News Corp will become, by some distance, the most powerful media group in Britain.
As a check to Murdoch power in the UK, the Sky News deal is only modest. The key sort of question to ask is whether News Corp can, say, buy up sports rights, and make them available online via the Times and Sun websites as well as through Sky. On an initial understanding of the agreement reached, that still looks possible. It will also be possible to bundle Sky News content into the Times and Sun websites, although presumably there will have to be a commercial arm's length agreement.
All this leaves one last hurdle - Rupert Murdoch has to now agree a price to buy the 61% of Sky he does not own. The 700p a share bid has been left behind by the market, but News Corp's efforts to talk down the bid range to 750p-800p look utterly hopeless as the independent directors said they would not roll over for anything less than £8. At last night's 795p, 850p looks like the bare minimum. But nobody thinks a deal won't be done; getting these kind of transactions through is classic Murdoch territory.
Jeremy Hunt has handled a difficult situation fairly well - even keeping out of the Murdoch family's way during the crunch negotiations of the past few weeks. After putting together a quick canny BBC funding deal, and getting Lord Patten into the chairmanship there too, he is a man on the up.
As for Rupert Murdoch, his position as an unofficial member of the British cabinet has barely been threatened. But then, did anybody ever expect that it would?
