News Corp Takeover of BSkyB

News Corporation owned by Rupert Murdoch’s is seeking to take full control of satellite broadcaster BSkyB, by acquiring the 60.9% of the shares it does not already own. It has offered 700p per share, valuing BSkyB at over £12bn. So far BSkyB are trying to resist the takeover.

News Corp already owns media channels such as in the US – Fox News and New York Post. In the UK, News Corp owns:

  • The Sun (published in Ireland as The Irish Sun)
  • News of the World
  • Times Newspapers Ltd.
  • The Sunday Times

News Corp has a tradition of cross subsidising avenues of business from its other profitable enterprises. At the start of satellite TV, this enabled Sky to run at a loss, forcing a merger with rival BSB on Sky’s terms. However, later, large losses forced News Corp to sell holdings in BSkyB. But, now they want to regain control of BSkyB.

If News Corp is successful in gaining control over BSkyB, it would make them the largest media owner in the UK, with a turnover of around £8bn (compared to publically funded BBC with a turnover of £4bn.)

Concerns over this takeover include both economic and political concerns.

  • Ownership of BSkyB would help promote News Corp newspapers leading to a less competitive market and perhaps greater barriers to entry. For example, getting a Sky package could give you online access to Times Online and vice versa.

However, perhaps the greatest concern relates to the political power that this news media would wield. Arguably in a democracy this could give undue influence to one company (and arguably one person – Rupert Murdoch). As the Sun said in 1992 (after Conservative surprise victory – It was the Sun Wot Won it)

It is not clear if there are any significant benefits to the public from the merger, e.g. economies of scale are likely to be fairly limited.  (see: benefits of mergers)

The takeover would require regulatory approval and it is not clear whether this will be given.

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