The pressure on News Corp.’s boss Rupert Murdoch ratcheted up Monday after deputy Prime Minister Nick Clegg urged him to “do the decent and sensible thing” and reconsider News Corp.’s bid for BSkyB.
LONDON (AP) — Shares in British Sky Broadcasting dropped sharply Monday on growing doubts over News Corp.’s ability to take full control of the lucrative satellite broadcaster amid signs that the government is looking at ways to block the deal.
The pressure on News Corp.’s boss Rupert Murdoch ratcheted up Monday after deputy Prime Minister Nick Clegg urged him to “do the decent and sensible thing” and reconsider the bid for BSkyB.
“I would simply say to him, look how people feel about this,” Clegg said.
Doubts over the future of the deal were further reinforced by the news that the government minister dealing with the bid sought fresh advice on the fitness of News Corp. to hold a broadcasting license. News Corp. already owns 39 percent of BSkyB and has made a bid for the remaining shares.
Murdoch has arrived in London to lead his company’s response to the scandal that has engulfed his organization over the past week since damaging revelations over the scale of phone hacking at the News of the World, the Sunday tabloid which was closed after 168 years.
BSkyB shares were down 5.5 percent at 709 pence ($11.32) in late morning trading on the London Stock Exchange. Just a week ago, BSkyB’s shares were trading as high as 850 pence.
Alex DeGroote, analyst at Panmure Gordon, said he thinks the probability of News Corp. taking control of the 61 percent of BSkyB it does not already hold has drained to only 10 percent.
DeGroote also said there are concerns now that News Corp. may even have to sell the 39 percent in BSkyB that it already holds following the news that Culture Secretary Jeremy Hunt is asking the communications regulator, OFCOM, whether News Corp. is “fit and proper” to hold a broadcasting license. If Ofcom decides it isn’t, a license would be denied.
“If the ‘fit and proper’ test is applied rigidly by Ofcom and events elsewhere worsen, it could become a factor,” DeGroote said.
Hunt said he is also seeking fresh advice from the competition regulator, the Office of Fair Trading, whether it stands by earlier advice that the takeover was acceptable in light of the decision to close the News of the World.
Last week, Hunt indicated his final decision would be delayed for a few months while he deals with an avalanche of public response to the deal.
Further pressure is coming from the opposition Labour Party, which is working to force a vote in the House of Commons on a motion asking the government to delay a decision on BSkyB. Liberal Democrats, the junior partner in Prime Minister David Cameron’s government, have signaled that they are ready to support that motion.
Murdoch met on Sunday with Rebekah Brooks, chief executive of News Corp.’s British unit, News International.
Brooks was editor of the News of the World at the time that employees of the paper allegedly hacked the phone of 13-year-old Milly Dowler, who was missing and later found murdered — Dowler’s parents are meeting with deputy Prime Minister Nick Clegg Monday to discuss the hacking. Those undertaking the hacking are said to have deleted some of Dowler’s voicemail messages, raising false hope that the girl was alive and using the phone.
That revelation caused public outrage, and triggered the sharp slide in BSkyB shares as well as the shock decision to close the News of the World after 168 years of publication. For News Corp., which owns Fox television and the Wall Street Journal as well as three other British papers, the News of the World represented a relatively small sacrifice.
Prime Minister David Cameron on Friday announced two public inquiries into the scandal: one led by a judge looking into phone hacking by newspapers and possible corruption involving police officers taking cash for information, and another into press regulation.
Two News of the World employees, Goodman and private detective Glenn Mulcaire, were sentenced to prison on 2007 for hacking the phones of aides to members of the royal family.
The newspaper’s executives insisted for years that the two men mounted a rogue operation and that there was no wider problem.
That stonewalling cracked this year as actress Sienna Miller and other people claiming to be phone hacking victims won settlements of court cases. More suits are pending, including one by Milly Dowler’s parents.
The News of the World earlier had made out of court payments to other claimants, including a reported 1 million pounds ($1.6 million) payoff to high-profile publicist Max Clifford.
James Murdoch, the heir apparent to head the Murdoch empire, said last week that he regretted authorizing the payments, though he gave no details of the recipients or the amounts. He has denied any knowledge of illegal activity at the paper.
The renewed police investigation so far has produced five arrests but so far no criminal charges.
Brooks and several executives have offered to be interviewed by police as witnesses, a source at News International confirmed, speaking on condition of anonymity.