U.K. media minister may refer buyout to Competition Commission

The political temperature surrounding News Corp.’s planned £7.8 billion ($12.5 billion) buyout of its U.K. paybox BSkyB just rose.

Media minister Jeremy Hunt, whose job it is to rule on the bid, said in a statement Tuesday that the takeover “may operate against the public interest in media plurality” and intends to refer the matter to the Competition Commission.

However, Hunt added that he was still considering undertakings by News Corp., chaired by Rupert Murdoch, that may alleviate his concerns about media plurality. He said: “News Corporation says that it wishes me to consider undertakings in lieu which it contends could sufficiently alleviate the concerns I have such that I should accept the undertakings instead of making a reference (to the Competition Commission). It is appropriate for me to consider such undertakings.”

These concerns were identified in a report by media watchdog Ofcom, which recommended referring the deal to the Competition Commission. Parts of the report, which Hunt received at the end of December, were made public for the first time Tuesday.

Ofcom said: “We believe there is a need for a fuller second stage review of these issues by the Competition Commission to assess the extent to which the concentration in media ownership may act against the public interest.”

Ofcom identified potential remedies: editorial independence for BSkyB’s 24-hour Sky News channel, divesting some media assets and blocking the proposed acquisition on public interest grounds.

News Corp. claimed that the regulator’s analysis was seriously flawed and had “failed to approach the effects of this transaction with an open mind.”

However, there is speculation that Murdoch may be prepared to sell the loss-making Sky News channel or one of its unprofitable U.K. newspapers such as the Times or the Sunday Times to secure a deal.

Another possibility is separating editorial control of Sky News from News Corp.

News Corp.’s takeover of BSkyB has been cleared by the European Commission, and Murdoch is anxious for it to go ahead in case the share price rises to a point where it no longer makes sense for the buyout to take place.

An eclectic alliance of U.K. media groups including the BBC, Channel 4, the Financial Times, Daily Telegraph and Associated Newspapers are campaigning against Murdoch’s buyout.

They argue that it would seriously restrict the range of media voices available to consumers and lead to a media power bloc of unprecedented size in the U.K.

The government demoted business secretary Vince Cable, the pol originally tasked with making the decision on the BSkyB deal, after he was caught on tape by two Daily Telegraph journos saying he wanted to “wage war on Murdoch.”

The responsibility for ruling on the bid was then passed to Hunt by Prime Minister David Cameron, whose own close links to the Murdoch empire are a cause of criticism.

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