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News Corp. Gets Antitrust Approval for BSkyB Bid, But ‘War’ is Declared

Commission vows support, but business secretary reportedly vows fight

News Corp.’s £7.8 billion bid to buy British Sky Broadcasting won anti-trust approval from the European Commission on Tuesday, clearing a key hurdle on the path to the mega-merger.

The Commission concluded the proposed transaction “would not significantly impede effective competition":

News Corp. and BSkyB are mainly active in different markets in the UK and Ireland and compete with each other only to a limited extent, in the wholesale supply of basic pay-TV channels and in the supply of online and TV advertising space. The Commission found that the proposed transaction would only lead to a small increment on BSkyB's existing share of the market for the supply of basic pay-TV channels in the UK and Ireland. The parties also have a small combined market share in the market for online and TV advertising. Therefore, the transaction does not give rise to horizontal competition concerns.

But the victory was short-lived. According to a report by the Daily Telegraph newspaper — citing a “secretly-recorded conversation” — U.K. business secretary Vince Cable has “declared war” on News Corp. Rupert Murdoch, setting up a bitter M&A fight.

“I have declared war on Mr. Murdoch and I think we are going to win,” Cable said, according to the paper. “I have blocked it, using the powers that I have got. And they are legal powers that I have got. I can’t politicize it, but for the people who know what is happening, this is a big thing. His whole empire is now under attack.”

A spokesperson for News Corp. said the company was “shocked and dismayed” by Cable’s comments, adding: “They raise serious questions about fairness and due process.”

UPDATE: Cable has been stripped of his duties overseeing media, telecom and broadcasting companies, the Telegraph reported late Tuesday afternoon. Another hurdle for Murdoch cleared!

Cable, however, is not alone in his opposition. As DealBook notes, Murdoch’s BskyB “plans have awakened opposition in Britain, some from surprising quarters. The Church of England came out against the transaction last month.”