Cable given the hook after saying he was at 'war' with Murdoch

News Corp.’s proposed $19 billion takeover of U.K. paybox BSkyB has thrown the government into crisis, with the politician responsible for scrutinizing the bid relieved of his duties to rule on the deal.

On Tuesday the European Commission cleared News Corp.’s bid to buy the 61% of the satcaster it does not own, leaving local regulator Ofcom’s probe the last hurdle for the deal.

But within hours of the EC greenlight, it emerged that the government’s business secretary Vince Cable, charged with scrutinizing the deal, had told undercover reporters from the Daily Telegraph that he had “declared war on Rupert Murdoch.”

The remarks, ironically leaked by a BBC blog, sparked an afternoon of high political drama.

A spokesman for Prime Minister David Cameron said Cable, a Liberal Democrat in the coalition government, would play no further part in the decision over News Corp.’s proposed takeover of BSkyB. “All responsibility for competition and policy issues relating to media, broadcasting, digital and telecoms sectors will be transferred immediately to the Secretary of State for Culture, Media and Sport. This includes full responsibility for Ofcom’s activities in these areas,” the spokesman said. “The prime minister is clear that Mr. Cable’s comments were totally unacceptable and inappropriate.”

A News Corp. rep said the conglom welcomed the EC decision but was “shocked and dismayed” by Cable’s comments. “They raise serious questions about fairness and due process.”

Cable’s remarks have paradoxically strengthened Murdoch’s case in his attempts to own BSkyB outright. The Dept. for Culture, Media and Sport is headed by Jeremy Hunt, an ambitious Conservative politician likely to approve the Murdoch takeover of the paybox.

The EC unconditionally approved News Corp.’s bid on competition grounds, with EU competition commissioner Joaquin Almunia saying, “I am confident that this merger will not weaken competition in the U.K. The effects on media plurality are a matter for the U.K. authorities.”

Last month Cable asked Ofcom to advise him on whether the deal should be blocked on media plurality grounds after pressure from rival media interests the Financial Times, Associated Newspapers, Channel 4, BBC director-general Mark Thompson and the Guardian Media Group.

Ofcom was due to report to Cable by the end of the year. If it had decided that media plurality could be affected, he could have asked the Competition Commission to investigate further.

Ofcom’s inquiry is regarded as being of such huge importance and sensitivity that it is being handled by the watchdog’s CEO, Ed Richards.

The Liberal Democrats are minority partners in the coalition government, which is dominated by the Conservatives who traditionally favor Murdoch’s interests in the U.K. In addition to BSkyB, these interests include tabloids the Sun and the News of the World plus the Times and the Sunday Times.

Speculation has been rife that Murdoch is so keen to own BSkyB outright that he may offload the money-losing Times and the Sunday Times to avoid the question of media plurality and get the BSkyB deal approved by regulators.

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