Britain was looking for a way out of approving media baron Rupert Murdoch’s multi-billion dollar deal to buy broadcaster BSkyB amid a phone-hacking scandal that has damaged the prime minister and raised broader questions about politicians’ relations with the media. Deputy Prime Minister Nick Clegg, from the junior coalition partner the Liberal Democrats, urged Murdoch to reconsider the bid after revelations one of his newspapers hacked into the phones of murder victims and relatives of Britain’s war dead.
New allegations on Monday included reports it had bought contact details for the British royal family from a policeman and tried to buy private phone records of victims of the Sept. 11, 2001, attacks on the US. “Do the decent thing, and reconsider, think again about your bid for BSkyB,” Clegg told BBC News after meeting relatives of one of the victims of phone-hacking, a murdered schoolgirl.
The govt, which faces a stormy parliamentary debate on Wednesday, earlier asked media regulator Ofcom and the consumer watchdog to reassess the bid in the light of the scandal, a move that could provide a basis to block the buyout.
The new request to Ofcom, which is already assessing whether News Corp is a ‘fit and proper’ holder of a broadcast licence, and the Office of Fair Trading follows a report in the Independent newspaper that government lawyers were drawing up plans to block the BSkyB bid. Shares in BSkyB dropped more than 7 percent on Monday morning after a similar fall on Friday. News Corp shares fell more than 7 percent in New York last week. “We believe the deal is all but dead,” Panmure Gordon analyst Alex DeGroote said.
The head of UK equities at one top 30 investor in BSkyB told Reuters they expected the deal to be delayed. “I believe the takeover will happen in due course but it is unlikely to go through until next year at the earliest,” the investor said. Murdoch flew to London on Sunday from the U.S. to try to contain the damage to his media empire, which wields influence from Hollywood to Hong Kong and includes U.S. cable network Fox and the Wall Street Journal as well as Britain’s biggest selling paper, the Sun. He has shown no sign of backing away from the BSkyB deal, which would be his company’s largest acquisition. Sources close to his company said he could consider other options to get it through if he felt the government was going to block or delay it, but they did not elaborate.
Eight people, almost all journalists, have been arrested so far in a police inquiry into the allegations, which include that police may have been paid for information and a company executive may have destroyed evidence. News Corp’s British media arm firmly denies any obstruction of justice.
