News Corp’s Sky bid gains in Cable’s “Murdoch war”

December 21, 2010

Vince Cable’s “war” on Rupert Murdoch may in fact be good for News Corp’s bid for BSkyB.

The bellicose remarks made by the UK business secretary to undercover reporters are a huge embarrassment given he had, until now, the power to block the takeover and was meant to exercise that power apolitically. But they may also increase the chances of the controversial deal being cleared. And the Daily Telegraph’s apparent self-censorship of Cable’s comments about a rival puts the newspaper, which has opposed the deal, in the same boat as the media mogul it wants to see tamed.

Before the remarks surfaced, it would have been hard for Cable — or his replacement — to ignore any clear recommendations for or against the proposed acquisition that will be made by media watchdog Ofcom and also potentially by the Competition Commission antitrust regulator. They are charged with assessing the possible impact of the deal on the plurality of the media in the UK. If they end up recommending a block, News Corp would almost certainly mount a stiff legal challenge.

Ofcom and the Commission will want to do everything by the book. But the relatively untested rules on plurality are deeply ambiguous and open to interpretation. That means it is conceivable that either Ofcom or the Competition are unable to reach a clear decision and suggest potential remedies to the deal. In that situation, News Corp might now find that whoever makes the final decision is inclined to err on the side of caution to avoid accusations of bias.

Cable, a Liberal Democrat, was seen as a nemesis to News Corp’s bid. The decision will now be in the hands of a member of the Conservative party as responsibility for the media sector has been passed to the coalition’s Department for Culture, headed by Jeremy Hunt. That leaves the final say on the deal in the hands of a party that Murdoch’s empire threw its full weight behind in the run-up to the general election.

The Telegraph appears to have been protecting Cable to serve its own interests — but the decision to refrain from immediately publishing the comments was bad judgment. News Corp says it is shocked and dismayed by the comments. It is probably also rubbing its hands in glee. In one fell swoop, Cable has undermined the plurality review, increased the chances of the bid for BSkyB being cleared and exposed one of News Corp’s key UK rivals as no better than itself.

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