The media in the UK are ganging up on Rupert Murdoch and his News Corporation empire in a bid to prevent News raising its stake in satellite pay-TV broadcaster Sky from its current 39.1 per cent to full ownership.
Earlier this year News offered 700p a share for the 60.9 per cent it doesn’t own, valuing the company at £12.3bn, but this was turned down by the Sky board who said it undervalued the company. Although they did agree to help News work through regulatory issues thus clearing the way for a higher agreed bid.
Now the bosses of most of Britain’s big media businesses including the BBC, Mail and Telegraph (although not ITV or pay-TV rival Virgin) have written to coalition business secretary Vince Cable asking (actually demanding) that he investigate the proposed deal on media plurality grounds, as he is able to under the Enterprise Act. News is also the biggest newspaper company in the UK, owning the Sun, The Times and the Sunday Times.
But is the argument really about media plurality (sustaining a diversity of views in the media) or money? After all News effectively controls Sky with its existing shareholding although the Sky directors, chiefly CEO Jeremy Darroch and director-at-large Allan Leighton, former boss of Asda and currently president of Canadian retailer Loblaw, owned by the Weston family, have shown they won’t be pushed around.
Or is it money? Most people expect Sky to make unconscionable amounts of it (it already makes nearly £900m pre-tax on revenues of £6bn) over the next few years as its investment in high definition, view-on-demand devices and 3-D pay off. The theory is that it won’t need to invest so much and therefore the new owner (Rupert) will just be able to sit back and collect the money.
And what will all this dosh be used for? Why to blast all these other media businesses off the map of course, by giving away free Jaguar cars with subscriptions to The Times and Sunday Times.
Somehow or other you can’t see this happening, nor is it too likely that the Murdochs (son James it seems is just as aggressive as his dad) would supplant the much-admired (although loss-making) Sky News with a UK version of its rabble-rousing Fox News in the US if it bought the rest of Sky.
But either eventuality could happen so business secretary Cable probably has no choice but to call in the takeover bid, assuming News comes back with a higher offer. Until it does he can’t.
The one certainty is that the Murdochs did not bank on a UK government referral, they thought the only problem would be the European Commission. So they will be furious (if hardly surprised) by this latest onslaught by their peers in the media.
They won’t be surprised to see the BBC in the lists (James Murdoch declared war on the Beeb at the 2009 Edinburgh International TV Festival) but will be surprised at the Mail and the Telegraph as Fleet Street types usually stick together through thick and thin. Richard Desmond, owner of the Express titles as well as broadcaster Five, is notable by his absence.
From the broadcast world telecoms company BT is lined up against News (the two have been feuding over access to Sky’s programme pile for years) and so, perhaps surprisingly, is Channel 4 which doesn’t really need to make enemies.
What will the Murdochs do?
Plan a horrible revenge of course but first they need to decide whether or not to raise their offer for Sky by another £1bn or so.