News Corp. Gets OK to Spin-Off Sky News in BSkyB Takeover

Critics say Murdoch would still retain influence over public company

Last Updated: March 3, 2011 @ 7:31 AM

A British official said Thursday he plans to accept News Corp.'s proposal to spin-off Sky News and take over British Sky Broadcasting.

The U.K. Secretary of State for Culture, Olympics, Media and Sport Jeremy Hunt effectively signed off of News Corp.'s plan to retain a stake in the new company and continue with its proposed £7.8 billion ($12.7 billion) bid to buy BSkyB. 

News Corp. proposed spinning off Sky News to address regulatory hurdles and rival news organizations' claims that its ownership of BSkyB could give it too much ownership of British media. News Corp. already owns 39 percent of BSkyB, and proposes to take over the company and retain the same percentage of Sky News while spinning it off into an independent, public company with a majority of independent directors on its board.

"Throughout this process I have been very aware of the potential controversy surrounding this merger," Hunt said in a statement. "Nothing is more precious to me than the free and independent press for which this country is famous the world over."

The proposed takeover has been contentious in the U.K. because of News Corp. head Rupert Murdoch's vast political interest.

Prime Minister David Cameron stripped Liberal Democrat business secretary Vince Cable of his duties overseeing media, telecom and broadcasting companies in December after a secretly-recorded conversation in which Cable said he had “declared war” on Murdoch. The power was then given to Hunt, a Conservative.

An alliance of five newspaper groups opposed to the takeover expressed doubt that Sky News would be truly independent from Murdoch's influence.

"It has been well-documented by former Murdoch editors that arrangements of this kind, including those put in place to protect the independence of the Sunday Times and Times, have proved wholly ineffective," the group said in a statement. "Smoke and mirrors will not protect media plurality in the UK from the overweening influence of News Corporation."