James Murdoch warns UK not to snub BSkyB investment
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ThE MaStEr
2010-11-18
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James Murdoch warns UK not to snub BSkyB investment
(Reuters) - James Murdoch said Britain must decide to back News Corp's 7.8 billion pound ($13 billion) bid for BSkyB or risk losing its investment in the "world leader" digital TV operation.
News Corp, whose chief executive is James's father Rupert, said in June it wanted to buy the 61 percent of pay-TV company BSkyB it did not already own. The two parties disagreed on price and have been seeking regulatory approval before further talks.
Britain has decided to intervene in a European-Union competition probe into the proposed deal on grounds that News Corp's British newspaper interests combined with full BSkyB ownership could give it too much influence over public opinion.
"While we do not think the grounds for a public interest or a plurality intervention are very strong, I do think that governments need to make some choices," James Murdoch, who heads News Corp's operations in Europe and Asia, said on Wednesday.
"From a policy perspective, the government needs to assess the benefits of having a digital TV business that is a world leader centred in the UK marketplace, with all of the things that it brings, versus potentially jeopardising an 8 billion-pound investment in the UK with a prolonged kind of plurality process," he told a conference in Barcelona.
Last month, Britain announced more than 80 billion pounds of public-spending cuts, the biggest cuts in a generation, to reduce the country's largest-ever peacetime deficit.
Speaking to journalists after his presentation at Morgan Stanley's annual technology, media and telecoms conference, Murdoch said the possibility of making disposals to secure approval for the proposed deal had not been discussed.
"No it has not," he said when asked whether the suggestion had come up internally or externally. "We are at a very early stage in this process, so it is dramatically premature to be commenting on theories that have not even surfaced yet."
Commentators have suggested that News Corp could dispose of the loss-making Sky News TV channel to appease regulators.
The approval processes in Europe and Britain could take until the middle of next year, during which time the market value of BSkyB is likely to grow as Britain's leading pay-TV operator reaps the benefits of past investments.
BSKYB GROWTH
BSkyB chief executive Jeremy Darroch told the conference that profit margins were likely to increase now. This month, the company reached its long-held target of 10 million subscribers, or 36 percent of British and Irish households.
"We should see good growth in margins from here," he said. "Widening margins will be an important part of the next two to three years."
He added that revenue growth would sometimes come from increasing subscriber numbers and sometimes by selling more services to additional subscribers, and said it was "business as usual" while the companies awaited the decisions of regulators.
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