Murdoch eyes the prize as BSkyB profits soar

BSkyB profits up 26 per cent as Murdoch remains in London to negotiate with Culture Secretary.

As Rupert Murdoch remains in London to lead negotiations personally with Jeremy Hunt over News Corp's attempted takeover of BSkyB, here's a reminder of why he's so keen to seal the deal.

BSkyB has today announced that profits rose by 26 per cent to £467m in the last six months of 2010, with revenues up 15 per cent to £3.2bn. Sky has also now passed its target of ten million subscribers, set by James Murdoch in August 2004, when subscriber numbers were at 7.4 million. The graph I've put together below, based on data from Enders Analysis, shows what a full merger between News International and the broadcaster would mean for media plurality.

Media companies by revenue

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In revenue terms, BSkyB is already the country's largest broadcaster, with an annual income of £5.4bn, comfortably ahead of the BBC (£3.6bn). A pair-up between News International and BSkyB (Murdoch at present owns a 39 per cent stake) would produce a UK media company with revenues of £6.4bn.

As Mark Thompson argued in his impressive MacTaggart Lecture, Murdoch's bid, if successful, would lead to a "concentration of cross-media ownership" that would be unacceptable in the United States or Australia, News Corp's other two key markets. Once the deal is complete, we can expect Murdoch to bundle his newspapers with Sky subscriptions in an attempt to offset falling circulation.

As the media analyst Claire Enders has predicted, by the middle of this decade, the News Corp head could control 50 per cent of the newspaper and television markets, a concentration of ownership that would make even Silvio Berlusconi blush. Regardless of the "undertakings" Murdoch is expected to offer to Hunt, there is an unarguable case for referring the bid to the Competition Commission.

George Eaton is political editor of the New Statesman.

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How the Conservatives lost the argument over austerity

After repeatedly missing their deficit targets, the Tories can no longer present spending cuts as essential.

“The age of irresponsibility is giving way to the age of austerity,” declared David Cameron at the Conservatives' 2009 spring conference. Fear of spending cuts helped deny his party a majority a year later, but by 2015 the Tories claimed vindication. By framing austerity as unavoidable, they had trapped Labour in a political no man's land. Though voters did not relish cuts, polling consistently showed that they regarded them as necessary.

But only two years later, it is the Conservatives who appear trapped. An austerity-weary electorate has deprived them of their majority and the argument for fiscal restraint is growing weaker by the day. If cuts are the supposed rule, then the £1bn gifted to the Democratic Unionist Party is the most glaring exception. Michael Fallon, the Defence Secretary, sought to justify this largesse as "investment" into "the infrastructure of Northern Ireland" from "which everybody will benefit" – a classic Keynesian argument. But this did not, he hastened to add, mean the end of austerity: "Austerity is never over until we clear the deficit."

Britain's deficit (which peaked at £153bn in 2009-10) was the original and pre-eminent justification for cuts. Unless borrowing was largely eliminated by 2015, George Osborne warned, Britain's public finances would become unsustainable. But as time has passed, this argument has become progressively weaker. The UK has cumulatively borrowed £200bn more than promised by Osborne, yet apocalypse has been averted. With its low borrowing costs, an independent currency and a lender of last resort (the Bank of England), the UK is able to tolerate consistent deficits (borrowing stood at £46.6bn in 2016-17).

In defiance of all this, Osborne vowed to achieve a budget surplus by 2019-20 (a goal achieved by the UK in just 12 years since 1948). The Tories made the target in the knowledge that promised tax cuts and spending increases would make it almost impossible to attain – but it was a political weapon with which to wound Labour.

Brexit, however, forced the Conservatives to disarm. Mindful of the economic instability to come, Philip Hammond postponed the surplus target to 2025 (15 years after Osborne's original goal). Britain's past and future borrowing levels mean the deficit has lost its political potency.

In these circumstances, it is unsurprising that voters are increasingly inclined to look for full-scale alternatives. Labour has remade itself as an unambiguously anti-austerity party and Britain's public realm is frayed from seven years of cuts: overburdened schools and hospitals, dilapidated infrastructure, potholed roads, uncollected bins.

Through a shift in rhetoric, Theresa May acknowledged voters' weariness with austerity but her policies did not match. Though the pace of cuts was slowed, signature measures such as the public sector pay cap and the freeze in working-age benefits endured. May's cold insistence to an underpaid nurse that there was no "magic money tree" exemplified the Tories' predicament.

In his recent Mansion House speech, Philip Hammond conceded that voters were impatient "after seven years of hard slog” but vowed to "make anew the case" for austerity. But other Tories believe they need to stop fighting a losing battle. The Conservatives' historic strength has been their adaptability. Depending on circumstance, they have been Europhile and Eurosceptic, statist and laissez-faire, isolationist and interventionist. If the Tories are to retain power, yet another metamorphosis may be needed: from austerity to stimulus.

George Eaton is political editor of the New Statesman.

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