Competition Commission may now scrutinise bid but Jeremy Hunt could reject recommendation
The media regulator Ofcom is this week expected to recommend that Rupert Murdoch's �8bn controversial buyout of BSkyB should be subject to a further six-month long inquiry ? and in so doing hand culture secretary Jeremy Hunt the toughest political decision in his time in office.
On Friday, Ofcom's chief executive Ed Richards will send over the conclusions of a "public interest" inquiry into whether News Corporation's buyout of Sky will damage media plurality in the UK ? and while the document will initially remain confidential most expect the regulator to demand a further investigation by the Competition Commission.
That leaves Jeremy Hunt ? the cabinet minister suddenly brought into the inquiry after Vince Cable's ill-advised "war on Murdoch" comments ? with about 10 working days to decide whether to follow Ofcom's advice or not. Although his discretion is free, it will be a major surprise if he deviates from the interim verdict.
At issue is whether, by controlling 100% of BSkyB, Rupert Murdoch will have a disproportionate influence over the British media ? in which News Corp has unprecedented cross-media power with titles accounting for 37% of the newspaper sales and control of the biggest broadcaster by turnover in the UK.
Critics ? an unlikely alliance of normally competing Fleet Street owners, including the companies behind the Daily Mail, the Daily Telegraph, the Daily Mirror and the Guardian ? argue that the power and influence of a company with at least �7.5bn of UK turnover will inevitably lead to the diminution of rivals.
Contact between the owner of the Times and the Sun and Ofcom in the run-up to Christmas left insiders at News Corp's Wapping headquarters braced for a referral. But that has not stopped sniping between the two with News Corp complaining that Richards did not attend any pre-Christmas case conferences between the two sides.
Even Vince Cable's spectacular fall from grace just before Christmas, when the Liberal Democrat business secretary was stripped of his responsibilities for media regulation after he was secretly recorded saying: "I have declared war on Rupert Murdoch [pictured right] and I think I am going to win," is not expected to have changed that outcome because of the quasi-judicial nature of the Ofcom examination.
So sensitive is Ofcom's work on the Murdoch enquiry that Richards has had to take personal responsibility for it. The regulator only took Christmas Day and Boxing Day off to conclude an inquiry that has taken two months to tackle issues of Murdoch power over the British media that have been rumbling on for years.
Ofcom has only to meet a fairly low threshold to conclude that the Murdoch merger needs to be examined further. A lawyer advising one of the newspaper groups opposing the deal said: "All the regulator has to prove is that there is a potential for a reduction in plurality in the UK. If there is such a potential then it has to recommend that it be referred to the Competition Commission."
The regulator's conclusion passes to Jeremy Hunt and he then has about 10 working days to decide what to do ? a decision that in law he must take alone, and not in consultation with David Cameron or other members of the cabinet. James Murdoch, who runs News Corp's operations in Europe and Asia, and his team are hoping they will be given the chance to "make representations" to Hunt.
Before Christmas Labour queried whether Hunt was a "fit and proper person" to adjudicate, given that he has said: "It does seem to me that News Corp do control Sky already, so it isn't clear to me that in terms of media plurality there is a substantive change." However, Sir Gus O'Donnell, the cabinet secretary, said he was satisfied that Hunt had not pre-judged the issue.
If held, a Competition Commission inquiry would amount to a more exacting test of the issues. The second regulator would not necessarily follow the judgment of Ofcom. As in Ofcom's case, the commission's verdict is not binding on Hunt.
Why all the fuss?
Why does the sale matter so much?
News Corporation is the UK's largest newspaper publisher, printing more than one in three copies sold. Sky is the largest broadcaster, with turnover of �5.9bn against the BBC's �4.8bn. The Murdoch family say a merger makes good financial sense, but critics say it would create a media group of unprecedented power, in which newspapers could be bundled with a Sky subscription, or Sky sports content could be shown exclusively on Times and Sun websites.
Doesn't Murdoch already control Sky?
No, he owns 40% of the voting shares in News Corp. It in turn owns 39.1% of BSkyB, with others holding the rest. Although Rupert's son James is BSkyB's chairman, the two companies are separate entities.
What is the vital criterion?
Cross-media power. Cross-media ownership rarely triggers competition law concerns, because TV and papers are considered distinct markets. Ofcom, though, is judging the deal by "public interest" considerations: whether the number of independent voices in media will be reduced as a result of a super-Murdoch company. This is known as the media plurality test.
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