Ru//pert Mur//doch: Mr Cable's obligationOwnership change of BSkyB matters: it would mean operations being directed for the s
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ThE MaStEr
2010-10-12
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Ru//pert Mur//doch: Mr Cable's obligationOwnership change of BSkyB matters: it would mean operations being directed for the sole benefit of News Corporation
Tuesday 12 October 2010
Would anyone in their right mind want Rup/ert Murd/och to end up owning nearly half the British national press as well as the richest broadcaster in the country – in revenue terms, twice the size of the BBC? The simple answer is no. Is this because of some knee-jerk anti-Murd/och prejudice? Again, no. It would be wrong for any company or individual to be allowed that kind of dominance over the media landscape in this (or, indeed, any) country.
In any other age, this would have been a given. In 1966 the Monopolies Commission was asked to pronounce on whether it was even right for the Times and Sunday Times to be in the same ownership. The only reason the merger was waved through was that it was believed Lord Thomson never used newspapers as a vehicle for his own views.
Some will look back at that age and see either misguided paternalism or rank naivety. But look what is on the cards now. News Corporation, a company listed in the US, is proposing to buy the 60% of BSkyB that it doesn't already own and merge the two companies – press and broadcasting – into one. Seven years ago Greg Dyke described BSkyB as an 800lb gorilla in British television. In truth, the gorilla was still in its infancy. Last year it made nearly £6bn in revenue, with operating profits of £855m. That makes it nearly double the size of the BBC, with its total funding of £3.6bn, and dwarfs ITV, with its revenue of £2bn. Were there to be a cut in the BBC's licence fee – as advocated by Jam//es Mu//rdoch, the chairman of Sky – the differential between BSkyB and any other broadcaster would be massive. That's some gorilla.
In addition to dominating the pay-TV world, Sky has built a commanding position in broadcast news, film and sports rights. Likewise, Ru//pert Murdo//ch and his companies own 37% of the national press market – the same share as the next two competitors combined. A recent paper by the respected media experts Enders Analysis predicted that News Corp's share of the national press market would steadily increase to more than 40% within four years. If other titles closed, the Enders paper warns, "the outcome could be more severe still" – in other words, Mr Mur//doch could inch his way towards owning more than half the market. Enders predicts that Murd//och would increasingly seek to bundle his newspapers and TV offerings together and that News Corp would have "greater opportunity to influence, tacitly or otherwise, the editorial coverage of Sky News and other BSkyB channels."
Other newspaper groups (and, of course, we declare an interest) have experienced at first hand how Mr Mur//doch has used predatory pricing to try to eliminate or weaken rivals. That is why virtually every other newspaper group – not to mention the BBC, C4 and other players, such as BT – have joined together in unprecedented unity to demand that the Sky bid is referred to the regulatory authorities on cross-media plurality grounds.
All this would matter whoever it was – and would, in any event, be impossible with any other significant combination of terrestrial channels and major newspaper groups: the law would simply not allow it. It matters especially with Mr Mur//doch, who has a track record across three continents in working to align political power with his own business interests. Recent weeks have seen the spectacle of elected MPs confessing that they feared his muscle so much they held back from full scrutiny of his affairs – hardly surprising, given the systematic (and illegal) trawling of dirt on public figures by part of Mr Mur//doch's organisation.
The change in ownership matters. Not only would it give Mr Mu//rdoch a huge cash flow, which he could use to subsidise any parts of his organisation, but the change in control would mean that future operations would be directed, not in the interests of all shareholders, but for the sole benefit (financial or political) of News Corporation. In the US, Mr Murdoch is balefully redefining the nature of television news with his virulently partial Fox TV channel – and his instincts are to do the same here.
Barely a fortnight ago Vince Cable, the business secretary, told his party conference: "Capitalism takes no prisoners and kills competition where it can." Mr Cable can now prove his faith in competition by referring the Sky bid on the grounds of the effect it would have on media plurality. The provision for a referral is there in the 2003 Communications Act. It would be suspiciously odd if Mr Cable didn't use it.
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