NewsCorp, which already owns The Sun, Times, News of the World and The Sunday Times, says it will spin off Sky News in order to address concerns about media plurality and avoid a lengthy review by the Competition Commission.
Sky News will be turned into a new publicly listed company, reportedly to be called Newco, which will be independently funded for 10 years, with a seven year renewable brand licensing agreement to ensure financial viability.
Newco will be controlled by independent directors with an independent editorial board that has no other News Corporation interests.
NewsCorp will still own 39% of the news company, whilst BSkyB shareholders will own the remainder.NewsCorp will not be able to increase its shareholding for the 10 year period.
Analysts have said NewsCorp wants to avoid a full competition enquiry as consistently strong results posted by BSkyB would increase its share price and put pressure on NewsCorp to increase its £7.8bn bid for the 61% of BSkyB it does not already own. Sky reported a 26% profit bump last month.
The Sky News proposals come after Hunt said last month he intended to refer the takeover bid to the Competition Commission.
NewsCorp says the spin-off will “preserve Sky News as a distinct media enterprise with a majority of independent directors”.
Today (3 March) Hunt says: “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.”
The culture secretary will still consult on the plans until 21 March when he will announce his final decision.
Should the takeover go ahead it is likely to be met with opposition from other media owners and an alliance of newspapers including the owners of the Daily Mail, Daily Telegraph, Daily Mirror and The Guardian have already called for the merger to be blocked because it may have an adverse affect on media plurality.
Broadcasting regulator Ofcom says the transaction will result in an increase in “News Corporation’s ability to influence public opinion [through Sky News]”.
Ofcom says, in a letter to the culture secretary, the deal would change the concentration of media ownership, affecting “sufficient plurality”.
Read Ofcom’s letter to Jeremy Hunt here.