Ofcom's Sky dilemma

BBC business editor Robert Peston on the control of Sky

Starbucks in Beijing, where I am struggling to establish an internet connection, may or may not be an appropriate place to reflect on the confirmation from Vince Cable that he is asking Ofcom to examine News Corp's offer to buy the 61% of British Sky Broadcasting which it doesn't already own (see my post in September, when I said he would ask for this review by the media regulator).

I have two thoughts.

First: Ofcom has been put in an intriguing position.

In its regulatory dealings with Sky over the past few years, it has regarded News Corp's existing 39% stake in Sky as giving News Corp control of Sky.

So - some would say - if it is being consistent and rational, it will conclude that increasing the stake from 39% to 100% does not in practice reduce choice or plurality in the media.

Of course, the media groups that want the acquisition blocked - which include the BBC, along with the Telegraph, Mail, Mirror and Guardian - believe that Ofcom's earlier analysis was perhaps too glib.

But their arguments against the takeover look primarily like competition arguments - such as whether News Corp would become a dominant news provider in the UK, too easily able to crush rivals, when endowed with Sky's formidable cash flows and when all News Corp's print and digital titles could be promoted for free on Sky.

These competition issues are not for Ofcom: they are being examined by the European Commission.

The one obvious plurality question relates to Sky News, the news channel owned by BSkyB. If it were integrated with News Corp's newspaper and online titles, then there would be a serious diminution of news "voices".

But under existing prohibitions on editorialising by television news services, it is difficult to see how News Corp could turn Sky News into an audio-visual version of the Sun or Times, even if it wanted to do so.

So, again, it may be that whether News Corp owns 39% or 100% of Sky is irrelevant to Sky News's editorial independence.

That said, I am told that if fears about the separateness and impartiality of Sky News proved to be the stumbling block to the takeover, News Corp would be prepared to sell Sky News - in order to land the fabulous, growing, cash-generating business that is the rest of BSkyB.

My sources for this are credible. But I have to admit to being sceptical that Sky News would be offloaded.

For one thing, Sky News - which is an expensive, lossmaking operation - would not be that easy to sell.

Second, Rupert Murdoch - always a news man, never a luvvie - probably loves Sky News more than any other part of BSkyB.

So it seems unlikely he would enthusiastically offer up the disposal of Sky News.‬‪

You can keep up with the latest from business editor Robert Peston by visiting his blog on the BBC News website.

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