Competition Commission Sidelined In BSkyB/News Corp Merger

The News Corporation's proposed merger with BSkyB is to proceed - despite a previous bid to refer it to the

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 the News Corporation on their proposed merger with BSkyB "in lieu of a referral to the Competition Commission".

A notice of consultation on the undertakings has been launched today and expires on 21 March.

The Secretary of State said the undertakings that News Corporation has offered would involve Sky News being 'spun-off' as an independent public limited company.

The shares in that company would be distributed amongst the existing shareholders of BSkyB in line with their shareholdings - News Corporation would therefore retain a 39.1% stake in the new company.

To ensure editorial independence and integrity in news reporting, the company would have a board made up of a majority of independent directors, including an independent chair, and a corporate governance and editorial committee made up of independent directors (who would have no other News Corporation interests).

News Corporation would not be allowed to increase its shareholding in the new company without permission from the Secretary of State for 10 years.

The company would have a ten-year carriage agreement and a seven-year renewable brand licensing agreement to ensure its financial viability - measures considered by the regulators to be long term in the rapidly changing media sector.

Jeremy Hunt said: "I am consulting on proposed undertakings from News Corporation. Informed by advice from the regulators, I believe that these will address concerns about media plurality should the proposed News Corporation/BSkyB merger go ahead.

"The undertakings offered would ensure that shareholdings in Sky News would remain unchanged, and indeed offer it more independence from News Corporation than it currently has.

"Throughout this process I have been very aware of the potential controversy surrounding this merger. Nothing is more precious to me than the free and independent press for which this country is famous the world over.

"In order to reassure the public about the way this decision has been taken I have sought and published independent advice at every step of the way, even when not required to do so by law. And I have followed that independent advice," he said.

Once the Secretary of State has considered responses to the consultation, he will reach a decision on whether he still believes that the undertakings of lieu should still be accepted.

If, after consultation, he is still of the view that the undertakings in lieu which News which Corporation has offered address the concerns about media plurality, he will accept them and not refer this merger to the Competition Commission.

This will mean that Rupert Murdoch's News Corporation has effectively been given government approval for its controversial takeover of BSkyB.

News Corp, which owns the Sun, the News of the World, the Times and the Sunday Times, is looking to take over the 61% of BSkyB that it does not own.

Culture Secretary Jeremy Hunt said he intended to accept News Corp's offer rather than refer the takeover to the Competition Commission.

Ofcom, the UK media regulator, had said the deal should be referred to the commission. The European Commission has already ruled there is no reason to oppose the takeover on competition grounds.

News Corp said it welcomed Mr Hunt's decision but opponents will have until 21 March to lodge any complaints.

A number of media groups have opposed the takeover, including the Guardian, Associated Newspapers, Trinity Mirror and the Telegraph.

(BMcC/KMcA)