Jeremy Hunt, the Secretary of State for Culture, Olympics, Media and Sport, has decided to bend over backwards to help News Corporation win control of BSkyB.
Even though the media regulator Ofcom says the £12.2bn buyout should be referred to the Competition Commission for a six month review, Hunt disagrees.
He going to give Rupert Murdoch and his executives at News Corp some time to come up undertakings — the sale of Sky News presumably — that could alleviate the concerns the OFT has about media plurality.
How jolly fair.
Highlights from Tuesday’s statement from Hunt.
After careful consideration of the Ofcom Report, which recommends referral to the Competition Commission, and as provided by in Section 104 of the Enterprise Act 2002 that sets out my duty to consult adversely affected parties, I met with News Corporation on 6 January to set out the process that I would follow and briefly explain Ofcom’s conclusions. Having informed them of the process I then wrote to News Corporation and BSkyB on 7 January enclosing a copy of Ofcom’s Report. In this letter I explained that I was minded to refer the case to the Competition Commission but that I would receive written, and if necessary oral, representations from them if they wanted to challenge my thinking.
“As a result of these meetings and my consideration of the Ofcom report and subsequent submissions from the parties involved I still intend to refer the merger to the Competition Commission. On the evidence available, I consider that it may be the case that the merger may operate against the public interest in media plurality.
“However, before doing so it is right that I consider any undertakings in lieu offered by any merging party which have the potential to prevent or otherwise mitigate the potential threats to media plurality identified in the Ofcom report.
News Corporation says that it wishes me to consider undertakings in lieu which it contends could sufficiently alleviate the concerns I have such that I should accept the undertakings instead of making a reference. It is appropriate for me to consider such undertakings. In considering whether to accept undertakings in lieu, I will ask the Office of Fair Trading, under section 93 of the Enterprise Act 2002 as an expert public body with experience in negotiating undertakings in lieu, to be involved in the process from this stage. I will also ask Ofcom under section 106B for advice whether undertakings in lieu address the potential impact on media plurality.
“It is in the nature of this process that I cannot give clear dates for each step as we move forward. My main concern is not to work to an arbitrary timetable but to ensure that I reach my decision in a fair and even-handed way which is transparent and ensures that all concerns are properly considered.”
We wonder if business secretary Vince Cable agrees.
Update 10.05am (BST):
There is a more charitable views of Hunt’s decision to give Murdoch a chance. The Secretary of State for Culture, Media etc has done it because he wants to avoid a judical reivew and is being ultra careful. Although presumably Murdoch wants to avoid that outcome to because the longer this all drags on the more News International will have to pay for BSkyB. Just think for a moment how much the market has risen since this deal was announced.
Anyway, here’s some comment from Olivetree Securities on the share price reaction.
The market may focus on the headlines such as “*U.K. INTENDS TO REFER BSKYB, NEWS CORP TO COMP. COMMISSION”, but these are misleading in our view – Jeremy Hunt is trying to give this process a chance to proceed without a lengthy timeline, which is a new and positive development
Bottom line here is that we take this as a small positive, given the degree to which the market was pricing in a full Competition Commission review timetable. There is a lot in the BSY shareprice already, but there is nothing here that is new to concern us, and infact there is a real possibility of a faster timetable than the market thought. Should BSY be weak on the headlines, we would be buyers. There are many hurdles still to be overcome, but the government is showing willing by going out of its way to try and allow this to proceed, which we take as a small positive.
Cable guy unplugged – FT Alphaville