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11 July 2011

Is the government reconsidering its position on the BSkyB deal?

Jeremy Hunt has written to Ofcom to ask if the closure of News of the World gives grounds to change

By Samira Shackle

The storm over Rupert Murdoch’s attempt to take over BSkyB gathered pace this morning, with the news that the Culture Secretary Jeremy Hunt will write to Ofcom and the Office of Fair Trading to see if the closure of News of the World gives grounds to reconsider his decision.

According to sources, the letter will ask whether the revelations of phone hacking meant that regulators could say that they no longer believed that NewsCorps could be trusted to abide by its promises.

This shows that the government is feeling the pressure to stall NewsCorps’ planned $14b (£8.7b) buy out of the 61 per cent of BSkyB it does not already own.

So far, Downing Street has consistently said that it cannot drop the BSkyB deal because it has already satisfied a plurality test, so any move they make to prevent it would lead to a judicial review. Hunt has reportedly been warned by his department’s lawyers that delaying the deal would be fraught with legal problems.

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However, his request to Ofcom signifies that the government is increasingly aware that it must find a way to act on the deal. If it does not, a damaging Commons rebellion that could result in a stand off between the legislature and the judiciary looks likely.

The Labour leader, Ed Miliband, plans to force a motion on Wednesday, proposing that the takeover is delayed until the criminal investigation is over. Nick Clegg is expected to allow his MPs to vote in favour of the motion, as long as it is legally sound and not overly partisan. This means there is a real chance that it will pass. Although the government would not be bound, it would place huge pressure on them to stall the deal.

A draft of the motion, obtained by the Times (£), reads as follows:

In view of widespread public concern at serious allegations about illegal practices at News International, and an ongoing police investigation, this House believes that the Secretary of State for Culture, Media and Sport should delay any decision on News Corp’s proposed acquisition for BSkyB until the outcome of the police investigation is known.

This draft has yet to be legally checked, but its words are neutral enough that Lib Dems should be allowed to vote in favour.

Hunt’s move comes as several figures in Murdoch’s inner circle are drawn deeper into the crisis. Rebekah Brooks, News International’s chief executive, may be questioned by police as a witness. Last night, Murdoch said that she was his first priority. Meanwhile, Les Hinton, Murdoch’s closest adviser and friend, faces questions over whether he saw a 2007 News International report which found evidence of widespread phone hacking before he testified to MPs that the practice was limited to a single reporter.

If successful, Hunt’s move could be a clever solution to the political headache facing the government. One thing is certain: granting more power to Murdoch in the immediate wake of this scandal would be disastrous. It appears that the government knows it.


UPDATE, 11.50am: Nick Clegg has made a dramatic intervention, appealing directly to Murdoch to drop the deal. His comments came after he met the family of murdered schoolgirl Milly Dowler, whose phone was hacked after her disappearance. Clegg said:

So do the decent and sensible thing and reconsider: think again about your bid for BSkyB.

Listening to Bob, Sally and Gemma Dowler, it reminds you that it is innocent families like them who have paid a very heavy price for truly grotesque journalistic practices, which are simply beneath contempt. We owe it to the Dowlers and other innocent victims of hacking to get these inquiries right, to make sure they are really strong, [so] they can get to the bottom of what happened and make sure it never happens again.

UPDATE, 12th July, 8am: Jeremy Hunt referred the bid for BSkyB to the Competition Commission yesterday, after Rupert Murdoch chose to withdraw his offer to spin off Sky News into a separately owned company in order to get the media merger cleared by the regulator. This process will push it back at least six months and cost NewsCorp millions.