11 Jul 2011
Next steps for Competition Commission after "calculated, strategic move by News Corp"
Following Culture Secretary Jeremy Hunt's decision to refer News Corp's bid for BSkyB to the Competition Commission (CC) yesterday, Lawrence Graham's head of EU, Competition and Regulation, Rosemary Choueka, sets out the next steps for the CC:
"It is a calculated and strategic move by News Corp to remove its previous offer to spin-off Sky News into a separate entity, thereby giving Jeremy Hunt no choice but to refer the matter to the CC, as he had concluded that the deal raised concerns about media plurality which could not be resolved by Ofcom without the undertakings. "The CC will receive a formal letter from the Culture Secretary stating the reasons for the referral and recommending that it should consider the public interest test: that there is a need to ensure plurality in the media.
"It has been argued that the closure of the News of the World could affect the decision on plurality as there is one less newspaper in the market. This is nonsense. The NotW was part of Murdoch's stable, and its closure does not represent the disappearance of an independent voice.
"The CC should be given breathing space and the time to do its job properly. It could take six months to a year to carry out its investigation and to assess and examine the body of information that it collects. This gives Rupert Murdoch some much-needed shelter from the heightened political and media pressure he and his company are currently under.
"The potential outcomes of this investigation are subject to a range of factors but if the CC does indeed have concerns about media plurality, there will be a recommendation that the Secretary of State should take action to remedy these concerns.
"The CC will try to negotiate undertakings with News Corp to deal with this issue but if they cannot be agreed or if News Corp is not prepared to give what the CC wants, then the deal can be blocked. But it is a process of negotiation ultimately. The best case scenario for News Corp is that the company will have to make some internal changes when the media storm has died down. The worst is that the deal cannot go ahead, or can only go ahead if News Corp loses some of its most valuable assets. Mr Murdoch has waited a long time for this to happen and clearly has a strong desire to take control of BSkyB. In order to save his broadcast empire, he could even have to sell his stable of UK-based newspapers to avoid the issue of a broadcast licence being revoked by the regulators, due to his News Corp directors not being deemed "fit and proper".
"Whilst the CC is tackling these issues, Ofcom will have a bit of a breathing space too as it can take its time to decide whether the directors of News Corp are "fit and proper" people to hold a broadcast licence. This would be nigh on impossible to prove at the moment as none of them have yet been directly implicated in the phone hacking scandal or any criminal activity. But nine months hence, when the CC has come to its conclusions, Ofcom should have far more of an idea of how the land lies."