Deal shows the power Murdoch still wields over politicians and the media

What does the Government green light to Rupert Murdoch’s £7.5bn takeover of BSkyB mean for Britain? Sheena Hastings reports.

HE has been described as a killer whale, one who has not lost his taste for blood, even though he will be 80 years old next week. The same commentator and former employee, one-time Sunday Times editor Andrew Neil, said that when it comes to doing deals media mogul Rupert Murdoch is “an Italian. The real negotiations begin after you’ve signed the deal.” In a few months time, then, the arrangements for Murdoch’s News Corporation to take over the 61 per cent of British Sky Broadcasting it does not already own could work out rather differently in practice.

Since he first bought into the British print industry when he purchased the News of the World in 1969, Murdoch, who calls himself a libertarian, has come to be regarded as some kind of Wizard of Oz. Seriously grown-up, experienced, articulate and successful people have been so awed by simply being in his presence that they instantly become fawning fools or temporarily struck dumb, running to stay in step with the quick-moving man from Melbourne with the bloodhound face and $11 Wal-Mart shirt. Some of his shirts might be cheap, but expensively suited heads of government around the world often send senior players to lunch with him knowing, as they do, that Murdoch’s might can go a long way to winning or losing them an election.

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This is, apparently, what happens when you take a couple of small Australian newspapers and turn them into the world’s largest and most powerful media group.

The British media and political worlds have worked themselves up into a froth yet again over Rupert Murdoch because culture secretary Jeremy Hunt has given the go-head to News Corp’s takeover of BSkyB, creating a media giant that would dwarf all others, including the BBC.

As a condition of the deal Hunt has stipulated that the Sky News operation must be detached from the parent company into a new stock market-listed company with its own board and a chairman who is not a News Corp employee – therefore not a member of the Murdoch clan. Rupert Murdoch’s son James (the heir apparent, say many) and daughter Elisabeth are both senior News Corp executives.

Sky News would be 61 per cent owned by outside investors and 39 per cent owned by News Corp, which could increase its holding within ten years only with government agreement. Its board and editorial board would have to have a majority of independent directors. Murdoch has agreed to this, and to financially support the loss-leading Sky News for 10 years. But the fear is that the well-regarded Sky News would simply become a pawn of a hugely enlarged BSkyB.

The Culture Secretary said he intended to accept News Corp’s offer rather than refer the takeover to the Competition Commission. The European Commission has already said there are no grounds to oppose the takeover on competition grounds. The UK media regulator Ofcom had wanted the deal scrutinised by the Competition Commission, but Ofcom has now said that “the revised proposed undertakings would address plurality concerns”. A consortium of media players including the Telegraph, Guardian and Daily Mail newspapers have opposed the takeover. They and other opponents have a short consultation period until March 21 to galvanise themselves, not at all mollified by Mr Hunt’s apparent conviction that the decision to hive of Sky News would address concerns about plurality.

“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,” he said.

Some commentators see the deal as yet another in a long line of political genuflections to the power of the 13th most powerful man in the world (according to Forbes magazine), and political opponents say the whole business casts an unflattering light on both David Cameron and the coalition.

In a honeytrap investigation by the Daily Telegraph, business secretary Vince Cable declared himself to be “at war” with Murdoch, and was relieved of certain duties when the gaffe came to light.

Since then the Lib Dems have proved to be ineffectual in persuading Conservative Jeremy Hunt to refer the BSkyB deal to the Competition Commission.

Labour MPs have broken out in a rash, calling the deal “grubby... and a sell-out of the British public, handing over near-monopoly of our cultural and media outlets to the Murdoch empire... We have reached a new low in British politics.” Great Grimsby MP Austin Mitchell said: “The fact that this deal has not been referred (to the Competition Commission) is indicative of how deep this Government is in hock to Rupert Murdoch.” Jeremy Dear, general secretary of the National Union of Journalists added: “Previous undertakings given by Rupert Murdoch have proven toothless and illusory. Today’s whitewash will prove no different.”

Steven Barnett, professor of communications at the University of Westminster, said the BSkyB deal raises yet again disturbing questions about “cosy deals” between government and Rupert Murdoch without proper regulatory scrutiny.

“Ofcom has raised important questions about the threat to news plurality in the UK from a single media corporation owning 37 per cent of the national press as well as one of only two commercial television news stations. It is imperative that the details of any compromise involving independent editorial control or the partial sale of Sky News are subjected to proper investigation by the appropriate regulators to ensure that news plurality is genuinely protected and sustained over the long-term. Previous deals involving ‘independent’ boards for Murdoch’s takeover of Times Newspapers and the Wall Street Journal have proved virtually worthless in protecting editorial independence.”

Murdoch is in the same position now as he was in 1990 when he made a “cosy deal” with Margaret Thatcher, says Bruce Hanlin, senior lecturer in journalism and media at the University of Huddersfield. But in 2011 the concern about plurality in news media is twinned with the unhealthy domination News Corp holds across other areas of TV, too. “The BBC is currently squeezed on the licence fee, ITV is only recently back in profit after years of disasters in ad revenues, and they are in no position to fend off the might of Murdoch’s company buying up, for instance, all the great dramas like Mad Men made by HBO in America that appeal to audiences in the UK. Murdoch is reshaping the media, forcing more people to buy into his subscription system to see the material they want. As for the safeguards in news, how safe are the safeguards? “

Mr Hanlin is not optimistic that any kind of rearguard action by the consortium of unlikely media bedfellows and others will succeed. “They can whip up a lot of stink, but I don’t seriously think they will overturn this decision. Rupert Murdoch has a strategic vision and has the money to execute it... He is so powerful that governments don’t like to displease him.”

Both Andrew Neil and Sir Harold Evans, another former editor of the Sunday Times, have written memoirs exposing the flimsiness of Murdoch’s assurances in respect of independent directors at the Times and elsewhere. Much of the British media industry sees his desire to make off with the whole of BSkyB as nothing short of wicked, saying he has no thought for the interests of the British public.

Of course, nothing will happen unless Rupert Murdoch persuades BSkyB’s shareholders to sell. The share price shot up yesterday, meaning News Corp would have to pay £9.1bn rather than the £7.5bn it initially reckoned on.