Increasing public and political pressure in the last week culminated on 13 July 2011 with News Corporation ('News Corp') abandoning its bid to take full control of British Sky Broadcasting Group PLC ('BSkyB'), in which it already holds a 39% stake. The move follows allegations of phone hacking against News of the World ('NOTW') a News Corp title.
The speed with which events have taken place is striking, with the deal having been 4 days away from likely approval by the Secretary of State for Culture, Olympics, Media and Sport Jeremy Hunt. Indeed Mr Hunt had previously confirmed that allegations relating to the phone hacking scandal were not material to his consideration of the undertakings.
The consultation on the revised undertakings previously offered by News Corp (see issue 527 of Community Week) ended on 8 July, with Mr Hunt's department reportedly receiving an additional 200,000 responses objecting to the proposed acquisition of BSkyB. On the same day Ofcom, the UK broadcasting regulator, sent an open letter explaining the powers and duties it had on this matter, in light of the focus on the continuing 'fit and proper persons' requirement for a broadcasting licence holder. In the letter it made unequivocally clear that it would not be acting whilst there were mere allegations, as this would prejudice a criminal investigation, but that it would be "monitoring the situation closely".
On 11 July Mr Hunt wrote to both Ofcom and the OFT. Ofcom in particular was asked its opinion on the effect of the closure of NOTW on media plurality; the effect that the 'fit and proper person' test may have on the proposed merger (and Mr Hunt's decision on media plurality); and any matters which would change Ofcom's advice on the "credibility, sustainability or practicalities" of the undertakings offered by News Corp. However upon these letters being revealed, News Corp voluntarily withdrew its proposed undertakings, leaving Mr Hunt to tell Parliament that the only course of action left open to him was to refer the proposed takeover to the Competition Commission ('CC').
The final act came on 13 July when before the CC could even begin its process, News Corp announced the withdrawal of its bid following strong words from the Prime Minister David Cameron and a Parliamentary vote asking for the bid to be withdrawn. As a result the CC plurality investigation has been abandoned.
News Corp has stated that it remains a "committed long-term shareholder" in BSkyB. Further, the door has been left open for a new bid to be made some time in the future should the political landscape become more favourable. Questions however remain over whether News Corp will seek to sell its remaining newspaper titles, which may change the UK's media landscape yet again.
To view Community Week, Issue 529; 15th July 2011 in full, Click here.
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