News Corporation takeover bid for BSkyB
Encyclopedia
The News Corporation takeover bid for BSkyB was a proposed takeover of British Sky Broadcasting
(BSkyB) by News Corporation
, the media conglomerate of Rupert Murdoch
. The bid was launched in June 2010, but was withdrawn in July 2011 following the News International phone hacking scandal. News Corporation already owned 39.1% of BSkyB, and held on to its stake following the collapse of the takeover bid. The takeover was an essential part of News Corporation's business strategy, not least as it would have made possible integration with other entities such as Sky Deutschland and Sky Italia
. The Guardian
went so far as to say that, "Without a full takeover of BSkyB, News Corp's global satellite strategy would look an unco-ordinated mess."
The first key turning point in the planned takeover was the removal in December 2010 of regulatory approval from Vince Cable, who had told undercover reporters from The Daily Telegraph
he had "declared war" on Murdoch. When these comments were made public, the final say on the deal went instead to Jeremy Hunt. Cable's comments on this matter were not published by the Telegraph, but were instead leaked to BBC journalist Robert Peston
, most likely (according to a later Telegraph investigation) by two former Telegraph employees who had moved to News International
, a News Corporation subsidiary. Hunt was much more sympathetic to the takeover bid than Cable.
The second turning point was the series of revelations in early July of the hacking of the phones of non-celebrity victims by the News of the World
, a tabloid newspaper published by News International. Details of the activities, especially regarding the paper's hacking into the voicemail of murder victim Milly Dowler, sparked widespread outrage against News Corporation. Attempts to defuse the scandal by closing the News of the World and publishing an apology by Murdoch both failed. In the face of a planned motion in the House of Commons calling on News Corporation to abandon the bid, News Corporation acquiesced.
to take full control of the company. News Corp had offered 700p per share for the remaining 60.9% of shares that it did not own. BSkyB said that it would only consider offers of at least 800p per share.
The proposal was also reviewed by the British government. On 4 November 2010 Business Secretary Vince Cable referred the takeover bid to Ofcom
to consider issues of media plurality. In July 2011 it was reported that around this time News Corp's News International
subsidiary had "bullied" the Liberal Democrats. The Observer
said that "According to one account from a senior party figure, a cabinet minister was told that, if the government did not do as NI wanted, the Lib Dems would be 'done over' by the Murdoch papers."
In late December 2010, undercover reporters from The Daily Telegraph
, posing as constituents, set up a meeting with Cable, in which he made some unguarded remarks about the coalition, including a description of the coalition's attempt at fast, widespread reforms (including the health service and local governments) as being a "kind of Maoist revolution". When his comments appeared in the press on 21 December, Cable stated, "Naturally I am embarrassed by these comments and I regret them", before reaffirming his commitment to the coalition government, stating that "I am proud of what it is achieving". In May 2011 the Press Complaints Commission
upheld a complaint regarding the Telegraphs use of subterfuge: "On this occasion, the commission was not convinced that the public interest was such as to justify proportionately this level of subterfuge."
In an undisclosed part of the Telegraph transcript, Cable stated in reference to Rupert Murdoch
's News Corporation takeover bid for BSkyB, "I have declared war on Mr Murdoch and I think we are going to win." This was given to the BBC
's Robert Peston
by a whistleblower unhappy that the Telegraph had not published Cable's comments in full, and also published on 21 December. Following this revelation Cable had his responsibility for media affairs – including ruling on Murdoch's takeover plans – withdrawn from his role as business secretary that same day. In July 2011 a firm of private investigators hired by the Telegraph to track the source of the leak concluded "strong suspicion" that two former Telegraph employees who had moved to News International
, one of them Will Lewis
, had gained access to the transcript and audio files and leaked them to Peston.
After the business secretary Vince Cable was stripped of his jurisdiction over the deal, the proposal was referred to Jeremy Hunt, the Secretary of State for culture, media and sport. Hunt initially elected not to refer to the deal to the Competition Commission
, announcing on 3 March 2011 that he intended to accept a series of undertakings given by News Corporation, paving the way for the deal to be approved. The undertakings would have led to Sky News
being severed from BSkyB. On 23 June it was reported that News Corp had reached an agreement with Ofcom
to approve the takeover, on the basis of Sky News
becoming a separate company.
By early July, despite public opposition to the deal, "Government says its ready to give clearance to deal. Jeremy Hunt gives opponents one final week to raise objections. However, he has provisionally agreed to proposals that will see Sky News be spun off as an independent company to allay fears the deal would give Mr Murdoch’s News Corporation too much control of the media. After the consultation ends on July 8, Mr Hunt is expected to wave the merger through once and for all. He is keen to give final confirmation by July 19 when the summer parliamentary recess begins." Several days later, with the News of the World phone hacking scandal exploding, Ofcom
intervened, saying that it has "a duty to be satisfied on an ongoing basis that the holder of a broadcasting licence is 'fit and proper’".
and other politicians, began to seriously question whether the takeover of BSkyB by News Corporation ought to be blocked. The Media Standards Trust
formed the pressure group Hacked Off, to campaign for a public inquiry
. Soon after launch, the campaign gained the support of suspected hacking victim, the actor Hugh Grant
, who became a public spokesperson, appearing on Question Time
and Newsnight
.
In July 2011, during the News International phone hacking scandal, BSkyB shares plummeted and Hunt received well over 150,000 submissions from members of the public, driven by efforts by campaign groups Avaaz.org
and 38 Degrees
. Most submissions were opposed to News Corp taking full control of BSkyB. News Corp subsequently withdrew undertakings made as part of negotiations with the government, triggering an immediate referral of the proposal to the Competition Commission.
Numerous analysts and commentators suggested that as a result of the phone hacking scandal, it would be politically difficult or impossible for News Corp to proceed with its takeover plans. In addition to public pressure for the deal to be withdrawn or for the Government to halt the proposal, Britain's major political parties all expressed the view that the deal should not go ahead. The Liberal Democrats
and the Conservatives
both indicated that they would support an opposition day
motion from Labour
calling on News Corp to rescind its offer.
On 13 July, shortly before the House of Commons was due to debate the motion, News Corporation announced that it would be withdrawing its proposal to take complete ownership of BSkyB. Chase Carey, the corporation's deputy chairman, stated that it was "too difficult to progress" with the proposed takeover given the phone hacking controversy.
In a symbolic gesture, the House later passed the opposition day motion unanimously by acclamation
.
British Sky Broadcasting
British Sky Broadcasting Group plc is a satellite broadcasting, broadband and telephony services company headquartered in London, United Kingdom, with operations in the United Kingdom and the Ireland....
(BSkyB) by News Corporation
News Corporation
News Corporation or News Corp. is an American multinational media conglomerate. It is the world's second-largest media conglomerate as of 2011 in terms of revenue, and the world's third largest in entertainment as of 2009, although the BBC remains the world's largest broadcaster...
, the media conglomerate of Rupert Murdoch
Rupert Murdoch
Keith Rupert Murdoch, AC, KSG is an Australian-American business magnate. He is the founder and Chairman and CEO of , the world's second-largest media conglomerate....
. The bid was launched in June 2010, but was withdrawn in July 2011 following the News International phone hacking scandal. News Corporation already owned 39.1% of BSkyB, and held on to its stake following the collapse of the takeover bid. The takeover was an essential part of News Corporation's business strategy, not least as it would have made possible integration with other entities such as Sky Deutschland and Sky Italia
Sky Italia
Sky Italia S.r.l. is an Italian digital satellite television platform owned by News Corporation launched on 1 August 2003, when the former platforms TELE+ and Stream TV merged together...
. The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
went so far as to say that, "Without a full takeover of BSkyB, News Corp's global satellite strategy would look an unco-ordinated mess."
The first key turning point in the planned takeover was the removal in December 2010 of regulatory approval from Vince Cable, who had told undercover reporters from The Daily Telegraph
The Daily Telegraph
The Daily Telegraph is a daily morning broadsheet newspaper distributed throughout the United Kingdom and internationally. The newspaper was founded by Arthur B...
he had "declared war" on Murdoch. When these comments were made public, the final say on the deal went instead to Jeremy Hunt. Cable's comments on this matter were not published by the Telegraph, but were instead leaked to BBC journalist Robert Peston
Robert Peston
Robert Peston is a British journalist. Since February 2006, he has been the Business Editor for BBC News. He became known to a wider public with his reporting of the late-2000s financial crisis, especially with his scoop on the Northern Rock crisis.-Early life and education:Peston is the son of...
, most likely (according to a later Telegraph investigation) by two former Telegraph employees who had moved to News International
News International
News International Ltd is the United Kingdom newspaper publishing division of News Corporation. Until June 2002, it was called News International plc....
, a News Corporation subsidiary. Hunt was much more sympathetic to the takeover bid than Cable.
The second turning point was the series of revelations in early July of the hacking of the phones of non-celebrity victims by the News of the World
News of the World
The News of the World was a national red top newspaper published in the United Kingdom from 1843 to 2011. It was at one time the biggest selling English language newspaper in the world, and at closure still had one of the highest English language circulations...
, a tabloid newspaper published by News International. Details of the activities, especially regarding the paper's hacking into the voicemail of murder victim Milly Dowler, sparked widespread outrage against News Corporation. Attempts to defuse the scandal by closing the News of the World and publishing an apology by Murdoch both failed. In the face of a planned motion in the House of Commons calling on News Corporation to abandon the bid, News Corporation acquiesced.
Offer
On 15 June 2010, BSkyB announced that it had rejected an offer from News CorporationNews Corporation
News Corporation or News Corp. is an American multinational media conglomerate. It is the world's second-largest media conglomerate as of 2011 in terms of revenue, and the world's third largest in entertainment as of 2009, although the BBC remains the world's largest broadcaster...
to take full control of the company. News Corp had offered 700p per share for the remaining 60.9% of shares that it did not own. BSkyB said that it would only consider offers of at least 800p per share.
Regulatory issues
Although the two companies had not agreed on a revised takeover proposal, News Corporation announced its intention to seek regulatory approval from the European Commission in November. The Commission unconditionally approved the proposal the following month.The proposal was also reviewed by the British government. On 4 November 2010 Business Secretary Vince Cable referred the takeover bid to Ofcom
Ofcom
Ofcom is the government-approved regulatory authority for the broadcasting and telecommunications industries in the United Kingdom. Ofcom was initially established by the Office of Communications Act 2002. It received its full authority from the Communications Act 2003...
to consider issues of media plurality. In July 2011 it was reported that around this time News Corp's News International
News International
News International Ltd is the United Kingdom newspaper publishing division of News Corporation. Until June 2002, it was called News International plc....
subsidiary had "bullied" the Liberal Democrats. The Observer
The Observer
The Observer is a British newspaper, published on Sundays. In the same place on the political spectrum as its daily sister paper The Guardian, which acquired it in 1993, it takes a liberal or social democratic line on most issues. It is the world's oldest Sunday newspaper.-Origins:The first issue,...
said that "According to one account from a senior party figure, a cabinet minister was told that, if the government did not do as NI wanted, the Lib Dems would be 'done over' by the Murdoch papers."
In late December 2010, undercover reporters from The Daily Telegraph
The Daily Telegraph
The Daily Telegraph is a daily morning broadsheet newspaper distributed throughout the United Kingdom and internationally. The newspaper was founded by Arthur B...
, posing as constituents, set up a meeting with Cable, in which he made some unguarded remarks about the coalition, including a description of the coalition's attempt at fast, widespread reforms (including the health service and local governments) as being a "kind of Maoist revolution". When his comments appeared in the press on 21 December, Cable stated, "Naturally I am embarrassed by these comments and I regret them", before reaffirming his commitment to the coalition government, stating that "I am proud of what it is achieving". In May 2011 the Press Complaints Commission
Press Complaints Commission
The Press Complaints Commission is a voluntary regulatory body for British printed newspapers and magazines, consisting of representatives of the major publishers. The PCC is funded by the annual levy it charges newspapers and magazines...
upheld a complaint regarding the Telegraphs use of subterfuge: "On this occasion, the commission was not convinced that the public interest was such as to justify proportionately this level of subterfuge."
In an undisclosed part of the Telegraph transcript, Cable stated in reference to Rupert Murdoch
Rupert Murdoch
Keith Rupert Murdoch, AC, KSG is an Australian-American business magnate. He is the founder and Chairman and CEO of , the world's second-largest media conglomerate....
's News Corporation takeover bid for BSkyB, "I have declared war on Mr Murdoch and I think we are going to win." This was given to the BBC
BBC
The British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...
's Robert Peston
Robert Peston
Robert Peston is a British journalist. Since February 2006, he has been the Business Editor for BBC News. He became known to a wider public with his reporting of the late-2000s financial crisis, especially with his scoop on the Northern Rock crisis.-Early life and education:Peston is the son of...
by a whistleblower unhappy that the Telegraph had not published Cable's comments in full, and also published on 21 December. Following this revelation Cable had his responsibility for media affairs – including ruling on Murdoch's takeover plans – withdrawn from his role as business secretary that same day. In July 2011 a firm of private investigators hired by the Telegraph to track the source of the leak concluded "strong suspicion" that two former Telegraph employees who had moved to News International
News International
News International Ltd is the United Kingdom newspaper publishing division of News Corporation. Until June 2002, it was called News International plc....
, one of them Will Lewis
William Lewis (journalist)
William Lewis is a British journalist who is a member of News Corporation's Management and Standards Committee. It is responsible for helping the police and other bodies find out the facts about the News of the World phone hacking scandal. The MSC is also charged with implementing new rules for...
, had gained access to the transcript and audio files and leaked them to Peston.
After the business secretary Vince Cable was stripped of his jurisdiction over the deal, the proposal was referred to Jeremy Hunt, the Secretary of State for culture, media and sport. Hunt initially elected not to refer to the deal to the Competition Commission
Competition Commission
The Competition Commission is a non-departmental public body responsible for investigating mergers, markets and other enquiries related to regulated industries under competition law in the United Kingdom...
, announcing on 3 March 2011 that he intended to accept a series of undertakings given by News Corporation, paving the way for the deal to be approved. The undertakings would have led to Sky News
Sky News
Sky News is a 24-hour British and international satellite television news broadcaster with an emphasis on UK and international news stories.The service places emphasis on rolling news, including the latest breaking news. Sky News also hosts localised versions of the channel in Australia and in New...
being severed from BSkyB. On 23 June it was reported that News Corp had reached an agreement with Ofcom
Ofcom
Ofcom is the government-approved regulatory authority for the broadcasting and telecommunications industries in the United Kingdom. Ofcom was initially established by the Office of Communications Act 2002. It received its full authority from the Communications Act 2003...
to approve the takeover, on the basis of Sky News
Sky News
Sky News is a 24-hour British and international satellite television news broadcaster with an emphasis on UK and international news stories.The service places emphasis on rolling news, including the latest breaking news. Sky News also hosts localised versions of the channel in Australia and in New...
becoming a separate company.
By early July, despite public opposition to the deal, "Government says its ready to give clearance to deal. Jeremy Hunt gives opponents one final week to raise objections. However, he has provisionally agreed to proposals that will see Sky News be spun off as an independent company to allay fears the deal would give Mr Murdoch’s News Corporation too much control of the media. After the consultation ends on July 8, Mr Hunt is expected to wave the merger through once and for all. He is keen to give final confirmation by July 19 when the summer parliamentary recess begins." Several days later, with the News of the World phone hacking scandal exploding, Ofcom
Ofcom
Ofcom is the government-approved regulatory authority for the broadcasting and telecommunications industries in the United Kingdom. Ofcom was initially established by the Office of Communications Act 2002. It received its full authority from the Communications Act 2003...
intervened, saying that it has "a duty to be satisfied on an ongoing basis that the holder of a broadcasting licence is 'fit and proper’".
Bid withdrawn
It was in the wake of the Milly Dowler phone hacking allegations that a significant number of people, including former deputy prime minister John PrescottJohn Prescott
John Leslie Prescott, Baron Prescott is a British politician who was Deputy Prime Minister of the United Kingdom from 1997 to 2007. Born in Prestatyn, Wales, he represented Hull East as the Labour Member of Parliament from 1970 to 2010...
and other politicians, began to seriously question whether the takeover of BSkyB by News Corporation ought to be blocked. The Media Standards Trust
Media Standards Trust
The Media Standards Trust was formed in 2006 to address concerns of a deterioration in journalistic standards at a time when the media were becoming enormously powerful while remaining largely opaque and unaccountable...
formed the pressure group Hacked Off, to campaign for a public inquiry
Public inquiry
A Tribunal of Inquiry is an official review of events or actions ordered by a government body in Common Law countries such as the United Kingdom, Ireland or Canada. Such a public inquiry differs from a Royal Commission in that a public inquiry accepts evidence and conducts its hearings in a more...
. Soon after launch, the campaign gained the support of suspected hacking victim, the actor Hugh Grant
Hugh Grant
Hugh John Mungo Grant is an English actor and film producer. He has received a Golden Globe Award, a BAFTA, and an Honorary César. His films have earned more than $2.4 billion from 25 theatrical releases worldwide. Grant achieved international stardom after appearing in Richard Curtis's...
, who became a public spokesperson, appearing on Question Time
Question Time (TV series)
Question Time is a topical debate BBC television programme in the United Kingdom, based on Any Questions?. The show typically features politicians from at least the three major political parties as well as other public figures who answer questions put to them by the audience...
and Newsnight
Newsnight
Newsnight is a BBC Television current affairs programme noted for its in-depth analysis and often robust cross-examination of senior politicians. Jeremy Paxman has been its main presenter for over two decades....
.
In July 2011, during the News International phone hacking scandal, BSkyB shares plummeted and Hunt received well over 150,000 submissions from members of the public, driven by efforts by campaign groups Avaaz.org
Avaaz.org
Avaaz.org is a global civic organization launched in January 2007 that promotes activism on issues such as climate change, human rights, corruption, poverty, and conflict...
and 38 Degrees
38 Degrees
38 Degrees is a UK non-profit, progressive, political activism organisation that campaigns on a diverse range of issues, such as protecting the environment and tackling climate change, democratic media ownership, child poverty and political reform...
. Most submissions were opposed to News Corp taking full control of BSkyB. News Corp subsequently withdrew undertakings made as part of negotiations with the government, triggering an immediate referral of the proposal to the Competition Commission.
Numerous analysts and commentators suggested that as a result of the phone hacking scandal, it would be politically difficult or impossible for News Corp to proceed with its takeover plans. In addition to public pressure for the deal to be withdrawn or for the Government to halt the proposal, Britain's major political parties all expressed the view that the deal should not go ahead. The Liberal Democrats
Liberal Democrats
The Liberal Democrats are a social liberal political party in the United Kingdom which supports constitutional and electoral reform, progressive taxation, wealth taxation, human rights laws, cultural liberalism, banking reform and civil liberties .The party was formed in 1988 by a merger of the...
and the Conservatives
Conservative Party (UK)
The Conservative Party, formally the Conservative and Unionist Party, is a centre-right political party in the United Kingdom that adheres to the philosophies of conservatism and British unionism. It is the largest political party in the UK, and is currently the largest single party in the House...
both indicated that they would support an opposition day
Opposition day
An opposition day is a day in a legislature using the Westminster System in which an opposition party sets the agenda. Most days the parliamentary agenda is set by the government; opposition days allow the smaller parties to choose the subject for debate. The number of days varies between...
motion from Labour
Labour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
calling on News Corp to rescind its offer.
On 13 July, shortly before the House of Commons was due to debate the motion, News Corporation announced that it would be withdrawing its proposal to take complete ownership of BSkyB. Chase Carey, the corporation's deputy chairman, stated that it was "too difficult to progress" with the proposed takeover given the phone hacking controversy.
In a symbolic gesture, the House later passed the opposition day motion unanimously by acclamation
Acclamation
An acclamation, in its most common sense, is a form of election that does not use a ballot. "Acclamation" or "acclamatio" can also signify a kind of ritual greeting and expression of approval in certain social contexts in ancient Rome.-Voting:...
.