View Full Version : BSkyB shares drop on Jeremy Hunt letter

11th July 2011, 12:39 PM
The shares fell by as much as 7% before recovering slightly.

It took BSkyB shares to below the 700 pence level that News Corp offered for them in June 2010.

The fall came after it emerged Culture Secretary Jeremy Hunt was writing to regulators to ask for fresh guidance on whether News Corporation should be allowed to takeover BSkyB.

When News Corp made its original approach, BSkyB's board told News Corp to come back with a higher offer.

The shares have risen as high as 850 pence in the past year on hopes that there would be a better offer.

Also on Monday, Deputy Prime Minister Nick Clegg called on Rupert Murdoch not to bid for BSkyB.

"Do the decent and sensible thing, and reconsider, think again, about your bid for BSkyB," he said.

Later, commenting on the latest revelations about News International paying police for the Royal Family's phone details, Labour leader Ed Miliband said it "casts a further cloud over that organisation" and makes the bid for BSkyB "more untenable".

"That is why I say very clearly to Mr Murdoch that he should withdraw the bid. I don't think it is conceivable in the current circumstances that it would command public support."

News Corp currently owns 39% of BSkyB.

BBC business editor Robert Peston said: "The importance of Mr Hunt's letter is in the generality: it is all a pretty clear hint that Mr Hunt might after all decide to refer the takeover to the Competition Commission for lengthy examination."

The culture secretary is to ask the media regulator Ofcom and the competition regulator, the Office of Fair Trading, whether the disclosure that News Corp's News of the World business was out of control for many years is reason to doubt that undertakings given by News Corp to protect the independence and financial strength of Sky News are credible and sustainable.

It previously looked likely that Mr Hunt would clear the proposed takeover as long as Sky News was made independent, but still financially supported by BSkyB.

But on Friday, Ofcom declared that it would take a view after police and court investigations had been completed about whether News Corp would be a fit and proper owner for the whole of BSkyB.

Our business editor described the statements as a "big obstacle" in the way of the takeover.

"For Mr Hunt to suggest that News Corp might not be a fit-and-proper owner of anything is a pretty big shift from the prevailing - and some would say fawning - attitudes towards Mr Murdoch we've witnessed from British governments in recent years," he said.