How could activities at News International be treated as something separate from its BSkyB bid?

first_img Sarah Davis is group commercial legal director at Guardian Media Group Never mind a week; a day is a long time in the politics of media regulation. On Monday Jeremy Hunt, who succeeded Vince Cable as the minister responsible for deciding on News Corporation’s proposed acquisition of up to 60.9% of BSkyB, told MPs that he is referring News Corporation’s bid to the Competition Commission. A week earlier no one would have predicted that, but then a week earlier Rupert Murdoch had not closed down the News of the World following public outrage over the phone-hacking scandal. Hunt’s announcement was the only possible response to News Corporation’s sudden withdrawal of the undertakings Murdoch had previously worked so hard to persuade the government to accept in exchange for allowing the bid to proceed. Murdoch’s surprise move seems to be aimed at taking the decision out of the hands of politicians and ensuring that it is not made at a time when News Corporation is vilified in all quarters. On Monday morning Hunt had asked the regulator Ofcom whether ‘any new information that has come to light causes you to reconsider any part of your previous advice, including your confidence in the credibility, sustainability or practicalities of the undertakings offered by News Corporation’. By Monday afternoon this question might have seemed less urgent, perhaps even redundant, following Hunt’s referral of the bid to the Competition Commission, which will buy Murdoch time. The commission may clear or block the proposed takeover, or it could propose remedies aimed at easing concerns about ‘media plurality’. A great deal has been written about the proposed acquisition by News Corporation of BSkyB since Cable, the business secretary, issued a European Intervention Notice in connection with the transaction, in November 2010, specifying the public interest consideration of sufficiency of plurality of persons with control of media enterprises. Hunt’s announcement this week in fact gives effect to Ofcom’s original advice, on the last day of 2010, that the bid should be referred to the Competition Commission. The secretary of state has a statutory discretion that allows him to accept undertakings in lieu of a reference to the commission. Hunt took the view that only if no suitable undertakings were offered by News Corporation would he refer the transaction. At times the secretary of state’s decision-making process seemed somewhat improvised, with merger control remedies being unsatisfactorily applied to public interest considerations. Then, less than two weeks ago, Hunt announced he was minded to exercise his discretion in favour of accepting News Corporation undertakings claimed to be sufficient to protect media plurality, which included Sky News being spun off as a separate, independent, entity and capping News Corporation’s shareholding at 39%. The collision of the phone-hacking scandal with this process has highlighted that the merger control remedy of accepting undertakings from News Corporation in lieu of a reference to the commission, in relation to the BSkyB bid, could not credibly be divorced from considerations of fitness and propriety. How could activities at News International, which raise serious questions of corporate governance, be treated as something separate from News Corporation’s BSkyB bid, given that the green light for the transaction rested on the secretary of state’s willingness to accept undertakings from News Corporation that related to corporate governance? While the ‘fit and proper test’ is not the secretary of state’s to apply, it was beginning to look untenable, both politically and legally, for there to be no consideration of this issue. The question that will now entertain and occupy media and competition lawyers is what Ofcom will do next. Last Thursday the regulator issued this statement: ‘In the light of the current public debate about phone hacking and other allegations, Ofcom confirms that it has a duty to be satisfied on an ongoing basis that the holder of a broadcasting licence is “fit and proper”.’ We look forward to hearing more about that. last_img

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