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Davide Morisi

January 12th, 2011

Media Plurality Dossier: The case of NewsCorp’s Bid for BSkyB


Estimated reading time: 5 minutes

Davide Morisi

January 12th, 2011

Media Plurality Dossier: The case of NewsCorp’s Bid for BSkyB


Estimated reading time: 5 minutes

An Updated Version of this Dossier is now available in the resources pages.

With the help of Diana Osipova, Davide Morisi brings together key documents, information and news sources on News Corporation’s bid for BSkyB and the media plurality debate in the UK.  These documents and sources were last been updated on March 8th, 2011.  Most recent updates are marked with a star (*).  The materials are organized as follows:

  1. Brief summary of the case
  2. Key documents
  3. Towards the approval of the deal
  4. The rise of Sky
  5. The role of Government
  6. EU Commision and the Office of Fair Trading
  7. Arguments against News Corporation’s bid
  8. Arguments supporting the merger

1. Brief summary of and key questions regarding the case

1.1. When it all began:
Rupert Murdoch’s News Corporation is seeking to take full control of satellite broadcaster BSkyB, by acquiring the 60.9% of the shares it does not already own.
BBC News – Memo for Vincent Cable – June 2010

1.2. Why does the sale matter so much?
News Corporation is the UK’s largest newspaper publisher, printing more than one in three copies sold. Sky is the largest broadcaster, with turnover of £5.9bn against the BBC’s £4.8bn. The Murdoch family say a merger makes good financial sense, but critics say it would create a media group of unprecedented power, in which newspapers could be bundled with a Sky subscription, or Sky sports content could be shown exclusively on Times and Sun websites.

1.3. Doesn’t Murdoch already control Sky?
No, he owns 40% of the voting shares in News Corp. It in turn owns 39.1% of BSkyB, with others holding the rest. Although Rupert’s son James is BSkyB’s chairman, the two companies are separate entities.

1.4. What is the vital criterion?
Cross-media power. Cross-media ownership rarely triggers competition law concerns, because TV and papers are considered distinct markets. Ofcom, though, is judging the deal by “public interest” considerations: whether the number of independent voices in media will be reduced as a result of a super-Murdoch company. This is known as the media plurality test.

2. Key documents

2a. Legal framework

2a.1. Enterprise Act 2002

“Section 67 allows the Secretary of State to intervene in order to protect legitimate interests, including that there is a sufficient plurality of persons with control of media enterprises.”

2.a.2. Secretary of State – European intervention notice given pursuant to section 67 enterprise act 2002, BIS – 4 November 2010:

“The Secretary of State … requires the Office of Fair Trading to investigate and report in accordance with article 4 of the Enterprise Act 2002 (Protection of Legitimate Interests) Order 2003 and Ofcom to investigate and report in accordance with article 4A of that Order, both within the period ending on 31 December 2010.”

2a.3. EU Commission Merger Regulation – 1 April 2010

2b. Ofcom

2b.1. Sky Response to Ofcom’s Invitation to Comment – 5 November 2010

“Sky has invested for many years, and continues to invest, in the operation of Sky News as a distinct, impartial and independent news service. The availability of Sky News to audiences, therefore, is the result of a strong commercial incentive, not of any obligation to provide television news. This incentive would remain irrespective of a change in ownership of Sky.”

2b.2. Ofcom Guidance note for public interest test on the anticipated acquisition of British Sky Broadcasting plc by News Corporation – 4 November 2010
Full Document:

2b.3. Ofcom Media ownership rules review – 31 July 2009

“Ownership is considered a proxy for viewpoints. However Ownership plurality does not always ensure a plurality of news sources.”

2b.4. Ofcom General guidance for the public interest test for media mergers

*2b.5. Ofcom’s December 2010 Report on the Public Interest Test (published January 2010)

*3.Towards approval of the deal (NEW SECTION)

*3.1. Analysis: What would the BSkyB sale mean?

If News Corp’s takeover of BSkyB goes ahead, it will be a big deal financially – but how big a deal is it for viewers and those concerned about choice and competition in news media?
BBC – 3 March 2011

*3.2. Jeremy Hunt gives News Corp green light to launch £8bn bid for BSkyB

Opponents brand Britain’s biggest media merger a ‘complete whitewash’ that will give Rupert Murdoch too much control
The Guardian – 3 March 2011

*3.3. Culture Secretary Jeremy Hunt makes a statement on proposed merger – 3 March 2011

Today, the Secretary of State for Culture, Olympics, Media and Sport  announced that, following advice from Ofcom and the Office of Fair Trading (OFT), he intends to accept undertakings from News Corporation on their proposed merger with BSkyB in lieu of a referral to the Competition Commission.

*3.4. Rupert Murdoch to dispose of Sky News for bid approval

Rupert Murdoch’s News Corporation has offered to dispose of most of the Sky News channel to allay concerns about the planned take-over of all of BSkyB.
BBC – 3 March 2011

*3.5. Sky News to be spun off in News Corp deal

“News Corp will spin-off the news operations of British Sky Broadcasting, under an agreement reached with regulators to address concerns over Rupert Murdoch’s bid for full control of the satellite broadcaster.”
Financial Times – 2 March 2011,s01=1.html

*3.6. News Corp nears solution on BSkyB concerns

“News Corp is close to an agreement with UK regulators over a remedy for concerns about its £13.2bn ($21.3bn) bid for satellite broadcaster British Sky Broadcasting, according to people familiar with the process.”
Financial Times – 24 February 2011

*3.7. Future of Sky News holds key to Murdoch’s bid for BskyB

“It’s all about pluralism. What does it mean? Can it be measured? Is a profitable, strong, dominant media player a genuine threat to the public interest?”
Evening Standard – 23 February 2011

*3.8. News Corporation faces stark choice over BSkyB bid.

Rupert Murdoch’s News Corp must either agree terms with the OFT or have its bid referred to the Competition Commission
The Guardian – 21 February 2011

*3.9. News Corp’s BSkyB bid: Murdoch looks set to get his way.

A recent seminar at City University suggested the legal basis for stopping the Sky takeover was weak
The Guardian – 16 February 2011

4. The rise of Sky

4.1. Murdoch media to control over a fifth of UK news consumption: Enders Analysis concludes that News Corp and Sky will produce 22% of all the news that Britons consume daily.
The Guardian – 30 December 2010

4.2. No wonder they’re scared – How Sky has consolidated its grip over British viewers

“Sky is already an immensely powerful competitor. It is so deep-pocketed, in fact, that even if the purchase were to be blocked by shareholders or regulators, the west London firm would continue to petrify commercial rivals.” The Economist – 14 October 2010

4.3. Rupert Murdoch and BSkyB: how powerful would a takeover make him?
Rupert Murdoch wants to own all of broadcaster BSkyB. If he gets his way, the shape of British media could change forever, according to a leaked report. See what the data says.
The Guardian – 11 October 2010

4.4. Enders Analysis – Memo for Vincent Cable – June 2010

“We think that there is a strong case that the transaction does raise substantial issues of ‘plurality’ as defined in the Court of Appeal judgment on the purchase of ITV shares by BSkyB in 2006.”
Full document:

4.5. Oliver and Ohlbaum Associates: See page 4 regarding BSkyB (“Pay TV continued to triumph in the face of adversity growing revenues and subscribers through the recession, developing new services and investing more in original content.”)
Global TV Economics in 2010 – 25 February 2010

*4.6. News Corp profit doubles despite MySpace charge
Financial Times – 2 February 2011

5. The role of Government

5.1. BSkyB takeover: Ofcom submits report to Jeremy Hunt: Media watchdog Ofcom has submitted its report on News Corporation’s takeover bid for broadcaster BSkyB to Culture Secretary Jeremy Hunt, it has said.
BBC – 31 December 2010

5.2. Vince Cable to stay on as Business Secretary: Business Secretary Vince Cable will stay in cabinet despite “declaring war” on Rupert Murdoch, says Downing Street.
BBC – 21 December 2010

5.3. Humiliated Vince Cable stripped of Sky role after “war with Murdoch” gaffe: David Cameron spares him from sack after emergency talks but boast costs Lib Dem minister takeover powers
The Guardian – Tuesday 21 December 2010

5.4. Vince Cable: I have declared war on Rupert Murdoch: Vince Cable has “declared war” on Rupert Murdoch, the media tycoon, The Daily Telegraph can disclose
The Telegraph – 21 December 2010

5.5. Vince Cable refers News Corp’s BSkyB bid to regulator: Business secretary Vince Cable has referred News Corporation’s controversial £12bn bid for full ownership of BSkyB to Ofcom
The Guardian – 4 November 2010

*5.6. Hunt delays referral of News-BSkyB bid
Financial Times – 25 January 2011

*5.7. Jeremy Hunt’s statement on proposed merger, 25 January 2011

6. EU Commission and the Office of Fair Trading

6.1. Mergers: Commission clears News Corp’s proposed acquisition of BSkyB under EU merger rules

“The European Commission has approved under the EU Merger Regulation the proposed acquisition of British and Irish pay TV operator BSkyB by News Corporation… The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it. The Commission’s findings concern solely the competition aspects of the proposed transaction. They are without prejudice to the on-going investigation by the competent UK authorities of whether the proposed transaction is compatible with the UK interest in media plurality, which is different from the Commission’s competition assessment. The UK remains free to decide whether or not to take appropriate measures to protect its legitimate interest in media plurality” (as permitted under Article 21 of the EU Merger Regulation).

6.2. Brussels clears News Corp bid for BSkyB
Financial Times – 21 December 2010

6.3. News Corp. Wins EU Antitrust Approval for BSkyB Deal
Bloomberg – 21 December 2010

6.4. EC clears News Corp’s BSkyB takeover: European authorities unconditionally approve deal, which will now be considered by business secretary Vince Cable.
The Guardian – 21 December 2010

6.5. The UK Office of Fair Trading declined to seek jurisdiction over the case: News Corp’s proposed acquisition of British Sky Broadcasting Group Plc will be reviewed by European Union antitrust regulators after the UK Office of Fair Trading declined to seek jurisdiction over the case.
Bloomberg – 29 November 2010

6.6. OFT May Pass on Review of News Corp’s BSkyB Bid, Lawyers Say: UK antitrust regulators won’t seek their own review of News Corp’s proposed acquisition of British Sky Broadcasting Group Plc while Business Secretary Vince Cable conducts a separate probe, lawyers and analysts said.
Bloomberg – 25 November 2010

7. Arguments against News Corp’s bid

7.1. BSkyB takeover will undermine UK media plurality (letter from Lord Fowler and others)

“Mr Murdoch himself has said that the reason Sky News is not yet more like Fox News is because ‘nobody at Sky listens to me’… The new merged company would also be able to “bundle” together television and newspaper services via BSkyB’s huge subscription base in a way that would place severe financial pressures on the rest of the media market.”
Financial Times – 10 January 2011

7.2. BSkyB: only 1 in 20 back Murdoch takeover, poll reveals ICM poll that questioned more than 2,000 people found that 44% were opposed to the deal, with just 5% supporting it.
The Guardian – 27 December 2010

7.3. Media plurality matters more than Mr Cable’s indiscretions

“There remain strong grounds for believing that this merger would diminish media plurality in Britain. Mr Murdoch would gain access to BSkyB’s lucrative revenue streams, which would enable him to cross-subsidise his UK newspaper interests.”
The Independent – 22 December 2010

7.4. News Corp-Sky merger concerns half the country: Liberal Democrat voters most worried about Murdoch power and influence, while Conservatives are that little bit more relaxed.
Organ Grinder Blog – 8 December 2010

7.5. Church of England criticises News Corp’s BSkyB bid: Bishop of Manchester calls on Ofcom to block takeover, saying merged group would dominate TV and newspaper landscape.
The Guardian – 23 November 2010

7.6. BSkyB and News Corp – Campaign welcomes Cable’s intervention

“There is increasing concern about the power of News Corporation and the influence the Murdochs have over political decisions made in the UK. I hope the consultation being undertaken by Ofcom will be wide ranging and not just limited to media companies. The public must have a voice.”
Campaign for Press & Broadcasting Freedom – 19 November 2010

7.7. Fleet Street unites against Murdoch: Media heads warn Vince Cable that Murdoch’s bid for BSkyB could destroy media plurality.
New Statesman – 12 October 2010

7.8. British media join forces against Murdoch takeover of BSkyB: Letter to Vince Cable signed by many of UK’s leading news providers warns £8bn deal would damage democratic debate.
The Guardian – 11  October 2010

7.9. Why Rupert Murdoch’s bid for Sky should be blocked: Commentary on Claire Ender’s memo.
Beehive City – 12 September 2010

7.10. We’re such a feeble nation that Murdoch was bound to triumph

“Our cross-ownership rules in the media are the lamest of any in an industrialised country. Anybody who objects to this is jumped on as ‘anti-enterprise’”.
The Observer – 27 February 2011

8. Arguments supporting the merger

8.1. Stephen Glover: Attack Google too, if you value privacy

“I still don’t grasp – though doubtless I am being very dim – how it will make much difference to the British public whether Mr Murdoch controls and runs BSkyB, as he does at present, or whether he controls, runs and owns the whole of it, as he hopes to do.”
The Independent – 10 January 2011

8.2. Murdoch the monopolist? Not in a digital future: The debate over whether Rupert Murdoch should be allowed total control of Sky is far too simplistic in an age where Google, Apple – or some techies from California – can achieve greater dominance in a globalised media.
The Observer – 9 January 2011

8.3. Critics of News Corp’s BSkyB takeover are missing the point: Rupert Murdoch’s opponents are wrong in their analysis – and risk the loss of both Sky News and billions in tax for the UK.

“No doubt News Corp will argue that, under the specific definition of media control in section 357 of the 2003 Communications Act, it has always controlled BSkyB. It follows that any increase in News Corp ownership of BSkyB cannot materially increase its control of the business, and that therefore the transaction can have no significant effect on media plurality.”
The Guardian – 5 January 2011

8.4. BSkyB: News Corp takeover is in the public interest: Sky board says that blocking takeover bid would threaten investment in the 24-hour Sky News channel.
The Guardian – 22 November 2010

8.5. James Murdoch: blocking BSkyB deal jeopardises UK jobs: News Corp chief claims there are no strong grounds for government intervention.
The Guardian – 17 November 2010

8.6. Clouding over the Sky: The Murdochs should be allowed to acquire Britain’s satellite broadcaster
The Economist – 14 October 2010

8.7. Why Rupert Murdoch’s bid for Sky shouldn’t be blocked
Beehive City – 15 September 2010

8.8. News Corp attacks ‘flawed’ Ofcom report
Financial Times – 25 January 2011

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Davide Morisi

Posted In: Media Plurality and Ownership

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