Hunt asks regulators to reconsider News Corp/Sky deal

News Corporation's takeover of BSkyB looks increasingly likely to be referred for a full investigation, as opposition mounts to the deal and culture secretary Jeremy Hunt writes to regulators to ask them to reconsider their position.

Jeremy Hunt: had been expected to wave through News Corporation's bid for Sky
Jeremy Hunt: had been expected to wave through News Corporation's bid for Sky

A spokesman for the Department of Culture, Media and Sport confirmed Hunt wrote to the Office of Fair Trading and Ofcom today to ask them to look again at News Corp's proposed undertakings in light of last week's allegations about phone hacking at the News of the World.

Hunt would like Ofcom and the OFT to consider whether the impact of the closure of the News of the World on media plurality and/or the new allegations of phone hacking effect whether the merger should be referred to the Competition Commission.

Hunt had been expected to wave through News Corporation's bid for Sky but last week's new allegations about the scale of phone hacking at the News of the World have galvanised opposition to the deal.

By the 12pm deadline on Friday the DCMS had received 156,141 responses to its consultation on the deal and a paper petition against the merger has received more than 100,000 signatures.

The move comes after Rupert Murdoch flew into the UK from the US this weekend to deal with the escalating fallout from the affair.

Political opposition to the Sky deal is mounting, with a Labour motion to be heard in the House of Commons on Wednesday that will ask MPs to vote on whether the proposed merger should be put on hold until after the police investigation into the action at the News of the World is over. It is expected that many Liberal Democrat MPs could support the motion.

On Thursday (7 July) News International, the British newspaper arm of News Corporation, made the shock move of closing the 168-year old News of the World in response to allegations of phone hacking.

Last week it emerged journalists at the News of the World could have been involved in hacking into the phones of a much wider range of people than was previously thought, including murder victim Milly Dowler and the families of dead soldiers.

News International had claimed that News of the World royal editor Clive Goodman and Glenn Mulcaire, a private investigator, were the only people who were aware of phone hacking at the newspaper.

It is understood that News International chief executive, and former News of the World editor, Rebekah Brooks has offered to speak to police as a witness. It is understood that this is likely to be in the coming weeks rather than this week.

Yesterday Keith Vaz MP, the chairman of the Home Affairs Committee, confirmed Metropolitan Police assistant commissioner John Yates will appear before the Committee on Tuesday (12 July) to discuss his 2009 review of phone hacking.

Vaz said: "Following recent media reports I am most grateful to Mr Yates for agreeing to give evidence to the Committee next Tuesday. It is important that we establish a timeline as to exactly what happened with the various police inquiries."

Increasingly Les Hinton, the former chairman of News International and the current chief executive of News Corp's Dow Jones & Company, has come under pressure as he twice told parliamentary committees there was no evidence the hacking extended beyond a single "rogue reporter".

BSkyB's share price has fallen dramatically since last week revelations about the possible scale of phone hacking and police bribery at the News of the World. Today shares were worth 703p, down from 850p last Monday (4 July).

Some media analysts now expect the deal to be "scrapped". Ian Whittaker, an analyst at Liberium Capital, said: "We think there is a very strong chance the News Corp bid for BSkyB gets completely scrapped.

"While the government has emphasised the due regulatory process has to be followed and there has been commentary News Corp would head to the courts if its bid was blocked, this has now become a completely politically-driven issue.

"It will be hard for the government to approve the bid, either now or at some point in the future."