Sky no limit for Murdoch

RUPERT MURDOCH is used to winning. Sometimes the battle is long and expensive, but the aged dictator of News Corp has the stomach and the funds. And so again, in Britain, his outfit appears to have won its campaign to own 100 per cent of BSkyB.

The rider is that Sky News must be set up as a separate company. It will be taken out from under the BSkyB, and therefore NewsCorp, umbrellas, and function as an 'independent' entity.

This is the formula that British Culture Secretary Jeremy Hunt – another politician now caged in the Murdoch zoo – has accepted, allowing News Corp to win its year-long fight to gain all of Sky.

English papers report Sly Bailey, the chief executive of Trinity Mirror, one of the companies opposing the takeover, describing the hive-off plan as a "complete whitewash". The coalition of media companies and the BBC which has opposed the £8 billion (€9.3 bn) deal might now seek judicial review.

Industry analysts say that Sky News is the acceptable face of BSkyB, otherwise a provider of sports broadcasts and endlessly recycled movies.

However, BsKYB has turned in good financial results lately, whereas the news operation is loss-making - as much as £20 million a year. Now Sky News will become 'Newco', an Orwellian-sounding vehicle, and News Corporation will license the name and brand of Sky News for an initial seven years.

The result comes after a drawn-out struggle for News Corp to gain the 61 per cent of BskyB it doesn't own. See our previous story here.

The solution is a fudge, but a fudge in Mr Murdoch's favour. Newco is a fig leaf to cover Mr Hunt's naked capitulation to market forces of a news mammoth which has been reasonably friendly to the Conservative Party, which dominates Britain's coalition.

Arguments that a News Corp takeover of BskyB would harden the dominant position that the corporation has in British media are hardly answered by this. The Guardian Trust and the BBC have always opposed such a move, even if merely dots the i and crosses the t of Murdoch influence.

However, there is some downside for News Corp. The Economist points out that the £7sterling a share which News Corp will pay for the Sky shares is worth US$11.40 today, as opposed to $10.82 when Murdoch's company made its initial approach last June.

Permission was needed from Ofcom, the British media regulator, and it duly came, with Ofcom releasing a statement that it felt the proposal answered concerns about market domination.

"Ofcom has advised the secretary of state that the proposed undertakings would address our concerns over plurality of news provision, resulting from the transaction, noting the detailed points set out in our letter," a spokesman said.

"Ofcom is pleased that News Corporation has agreed in the proposed undertakings to place editorial independence and integrity at the heart of Newco and to underpin this with arrangements that secure full independent governance."

A 'confidential' letter on the Ofcom website goes through the various exchanges between government, the regulator and NewsCorp (warning – lengthily!)