Sky News at threat, BSkyB directors warn Ofcom

In yet another twist to the drama surrounding News Corp’s proposed acquisition of the remaining shares in BSkyB, the independent directors of BSkyB are reported to have warned UK telecoms and broadcasting regulator Ofcom that ruling against the DTH pay-TH operator would be a “perverse outcome”and a threat to the Sky News channel in particular.

On 4 November, UK Secretary of State for Business Vince Cable referred to Ofcom the bid by News Corp to buy the remaining 61% of shares in BSkyB that it doesn’t own. Cable issued an intervention notice on News Corp’s proposal under Section 67 of the UK’s Enterprise Act 2002 , made on the basis of the submissions and information that the Secretary of State received regarding the proposals.

The notice requires Ofcom to investigate the public interest consideration of media plurality that arises from News Corp’s proposal. In addition, owing to the size of the acquisition, thought to be in the region of £12 billion, the European Commission has been obliged to investigate the proposed acquisition on the grounds of competition and will announce its own decision by 8 December.

According to The Financial Times, in their submission to Ofcom over the issue, the BSkyB independent directors argue that the referral puts at risk the popular Sky News channel. They point out that Sky News accounts for less than 5% of UK news viewing and that assuming Ofcom found evidence that a deal would seriously curtail the diversity available to viewers, this could actually put the existence of Sky News at risk.

The FT reported the submission as saying: “The availability of Sky News to audiences is the result of a strong commercial incentive, not of any obligation to provide television news? Conversely, it has the potential to be undermined if merger control were to operate such that the operation of Sky News inappropriately or unduly restricted any merger or acquisition opportunities which may be available to Sky.

“Thus, a conclusion that the transaction would result in a loss in plurality could perversely increase the risk of that very situation by undermining the incentives which have resulted in the provision of Sky News to date.”

Source: Rapid TV News

Updated: Monday 22 November 2010