Business secretary Vince Cable has intervened in News Corporation‘s proposed takeover of BSkyB, ordering the broadcast regulator Ofcom to examine the deal.
An intervention notice was issued under Section 67 of the Enterprise Act 2002 last night on the basis of information the business secretary had received regarding the proposals.
Cable said: “On the basis of the information and submissions available to me, I have decided that it is appropriate to issue an intervention notice in this particular case.
“The independent experts at Ofcom will now investigate and report to me on the media plurality issues that may arise from this proposed acquisition.”
The notice requires that Ofcom investigate the public interest considerations that arise from News Corp‘s proposed takeover and submit a report by 31 December.
Cable’s referral follows the formation of an unprecedented alliance of leading print and broadcast media businesses who wrote jointly to the Government last month asking it to intervene in Rupert Murdoch’s attempts to take full control of BSkyB.
The letter to Cable claimed that a merger of the country’s biggest newspaper group – the Murdoch-owned News International – and Sky – the country’s biggest pay TV broadcaster – could have negative consequences for diversity in the media.
The letter was signed by the chief executives of Telegraph Media Group, Associated Newspapers and the Guardian Media Group, regional newspaper publishers Northcliffe Media and Trinity Mirror, along with those of BT and Channel 4 and BBC director general Mark Thompson.
Ofcom will now have to consider if News Corporation’s sole ownership of BSkyB could give it too much power over those other UK media businesses. Following submission of its report, the business secretary will then decide whether or not to refer the matter to the Competition Commission.
News Corp issued a statement this morning saying it was confident that the proposed investment “will not adversley affect media plurality in the United Kingdom”.
The official stage of the proposed takeover was instigated yesterday when News Corp notified the European Commission of its intention to take full control of BSkyB.
The notice of intent was uploaded to the Commission’s website setting in motion the 25-day legal process that formalises the media giant’s attempts to take a tighter hold on the pay TV market in the UK.
Owing to the size of the acquisition, the European Commission will investigate the proposed acquisition on the grounds of competition and it will announce its decision by 8 December.
News Corp started the process to buy the 61 per cent of BSkyB it does not already own in early June when it offered 675p a share for the business.
BSkyB’s board rejected this initial cash offer saying it ‘undervalued’ the company.
Murdoch’s company then increased its offer to 700p per share – worth around £7.8bn.
This was again rejected by BSkyB, which wants around 800p per share – around £12bn – however, the company entered into a ‘cooperation agreement’with News Corp to explore a buyout.