Announcement

News Corporation / BSkyB merger – 3 March 2011

Jeremy Hunt intends to accept undertakings from News Corporation on their merger with BSkyB.

The Secretary of State for Culture, Olympics, Media and Sport made the announcement following advice from Ofcom and the Office of Fair Trading (OFT) in lieu of a referral to the Competition Commission.

A notice of consultation on the undertakings has been launched today and expires on 21 March.

The Secretary of State is required to look at the specific issue of media plurality related to the merger (competition issues having already been dealt with at European level) and issues of plurality focus on the provision of news.

The undertakings that News Corporation has offered would involve Sky News being ‘spun-off’ as an independent public limited company. The shares in that company would be distributed amongst the existing shareholders of BSkyB in line with their shareholdings - News Corporation would therefore retain a 39.1 per cent stake in the new company. To ensure editorial independence and integrity in news reporting, the company would have a board made up of a majority of independent directors, including an independent chair, and a corporate governance and editorial committee made up of independent directors (who would have no other News Corporation interests). News Corporation would not be allowed to increase its shareholding in the new company without permission from the Secretary of State for 10 years.

The company would have a ten year carriage agreement and a seven year renewable brand licensing agreement to ensure its financial viability - measures considered by the regulators to be long term in the rapidly-changing media sector.

Jeremy Hunt said: “I am consulting on proposed undertakings from News Corporation.  Informed by advice from the regulators, I believe that these will address concerns about media plurality should the proposed News Corporation/BSkyB merger go ahead.  The undertakings offered would ensure that shareholdings in Sky News would remain unchanged, and indeed offer it more independence from News Corporation than it currently has.

“Throughout this process I have been very aware of the potential controversy surrounding this merger. Nothing is more precious to me than the free and independent press for which this country is famous the world over.  In order to reassure the public about the way this decision has been taken I have sought and published independent advice at every step of the way, even when not required to do so by law. And I have followed that independent advice.”

Once the Secretary of State has considered responses to the consultation, he will reach a decision on whether he still believes that the undertakings in lieu should still be accepted.  If, after consultation, he is still of the view that the undertakings in lieu which News Corporation has offered address the concerns about media plurality, he will accept them and not refer this merger to the Competition Commission.

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Notes to Editors

On 3 November 2010 News Corporation notified the European Commission of its intention to acquire the shares in BSkyB that it does not already own. On 4 November 2010 the Secretary of State for Business, Innovation and Skills issued a European intervention notice in relation to the proposed acquisition.

The Business Secretary asked Ofcom to investigate and provide advice and recommendations on the public interest consideration in section 58 of the Enterprise Act 2002. This public interest consideration concerns the sufficiency of plurality of persons with control of media enterprises.

On 25 January 2011 Jeremy Hunt announced that he intend to refer the merger to the Competition Commission as he considered that it may operate against the public interest in media plurality, but that he would first consider (and ask the OFT and Ofcom for advice on) undertakings in lieu offered by News Corporation.

This investigation, and the Secretary of State’s decision, is solely and specifically on the issue of media plurality.  The European Commission has already looked at competition issues, and on 21 December 2010 cleared the proposed merger.  The Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it.  The Commission made it clear that its decision did not prejudice the Secretary of State’s jurisdiction in relation to the merger’s impact on the separate question of sufficiency of plurality in the media.

DCMS has today published the undertakings proposed by News Corporation, all advice received from Ofcom and the OFT, correspondence between the Secretary of State and News Corporation, and a timeline of the process followed.

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