Media: All about ... News Corp's BSkyB takeover

By Alasdair Reid, campaignlive.co.uk, Friday, 22 October 2010 12:00AM

Murdoch's digs at the BBC illustrate the stakes involved.

So, the Thunderer has thundered - and it reckons the BBC has made a mistake, big time stylee. Well, it would do, wouldn't it?

News Corp and Rupert Murdoch, its chief executive, and the BBC have had to be separated in the playground a couple of times already this year - and even a trip to the head's office probably won't strip them of their seething sense of militant self-righteousness.

Not so long ago, there was every prospect of these two becoming bestest friends, two overgrown monkeys, several-hundred-pound gorillas, some said, carving up the UK media jungle between them.

No longer. This town, to add to our confused jumble of topological metaphors, just ain't big enough for the both of them. And it's telling that the BBC now finds itself aligned with the unlikeliest of allies - Associated Newspapers and Telegraph Media Group, two of its erstwhile deadliest of enemies.

But then, as always, when the fighting gets really dirty, the enemy of your enemy may easily become your friend.

1. On 11 October, the BBC made a common cause with Telegraph Media Group, Associated Newspapers, Trinity Mirror, BT, Channel 4 and Guardian Media Group, in agreeing to be a joint signatory of a letter to Vince Cable, the Business Secretary. This petition pleads with the Government to block News Corporation's proposed takeover of BSkyB, arguing it would have serious consequences for media plurality.

2. On 13 October, News Corp responded through its News International-owned Times newspaper - focusing in particular on the BBC's involvement. An editorial piece argued that, by lending his name to this campaign, Mark Thompson, the director-general of the BBC, had made a surprising and serious error of judgment. The article stated: "He has embroiled his taxpayer-funded organisation in a political and commercial battle that it should have nothing to do with."

It added that BBC journalists will now be compromised if they attempt to follow this story - and concluded by insisting that any BBC pretence to disinterested objectivity is now at an end.

3. Back in June, News Corp offered £7 per share for the 60.9 per cent of BSkyB that it does not already own. The offer, which was rejected, valued the company at about £12 billion. BSkyB sources indicated that it could not see itself selling at anything less than £8 a share - but the two sides agreed to enter into talks, which would look not just at price but at regulatory issues likely to affect a potential deal.

4. In the UK, the Competition Commission has ruled that News Corp effectively already controls BSkyB through its existing shareholding - and News Corp is now believed to be awaiting a regulatory rubber stamp from the European Commission. But if and when EC approval is granted, there is still scope for the Government to intervene on potential public-interest grounds. It would then instruct Ofcom to examine whether "media plurality" - a rather ill-defined notion - could be compromised. Meanwhile, News Corp continues to assert that it is motivated purely by financial considerations - it wants to harvest a greater share of BSkyB's projected £1 billion annual profits.

5. News International outlets have unashamedly promoted BSkyB's interests down the years. BSkyB has had a limited ability to reciprocate - as a platform provider, it is unable to interfere in content issues at the channels it carries but does not own. However, News International has always offered commercial package deals across its newspapers and Sky's TV and online properties.

6. In ad market terms, however, the takeover proposition is made more interesting by the growing stature of Sky Media, BSkyB's digital and TV sales house. It has increased its market share over the last year, having won the right to represent Viacom. It has also taken on sales duties for the former Virgin Media TV channels recently acquired by BSkyB.

7. Many observers in the ad market suspect that News Corp's opponents in this matter are not entirely motivated by plurality concerns. But this is a potent issue on which to fight - as below-the-line responses to stories across a wide spectrum of online news sites tend to show.

WHAT IT MEANS FOR ...

RIVAL MEDIA OWNERS

- At first blush, it would appear that members of this popular media front are running scared - even the bombproof, lavishly funded BBC. True, the Beeb actually has the least to lose - taking sides won't accelerate the rate at which its wings will be (deservedly) clipped over the coming decade. But rival media owners have genuine worries.

- First, if a greater News Corp UK is successfully able to leverage its television assets against its print and online properties, it will be able to increase its share of UK advertising revenues - and such a prospect will hardly be welcomed by the likes of Associated Newspapers and Telegraph Media Group.

- But there's a second, and arguably more potent, long-term threat: a scenario by which News Corp uses its television assets to make sense of its newspaper pay-walls. It could use its channels to spearhead renewed marketing efforts and its call centres to sell joint TV-newspaper subscription packages. At a stroke, The Times could find itself with several million subscribers.

- If these developments come to pass, weaker rivals, some of which have struggled woefully to develop coherent long-term digital strategies, could, in short order, be facing an end-game.

ADVERTISERS

- The big media agencies are currently telling their clients not to worry - they have the clout to counter any increased News Corp leverage. Advertisers are not entirely convinced.

This article was first published on campaignlive.co.uk

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