David Prosser: Murdoch is not blinking in the battle for Sky – nor should Vince Cable

Outlook: It would be remarkable if the Business Secretary did not ask Ofcom to investigate adeal that has the potential to transform the British media

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So it is game on. News Corp's notice to the European Commission that it intends to make a formal bid for the 61 per cent of Sky it does not already own gives Vince Cable a nasty little problem. The Business Secretary has two weeks to decide whether to intervene in the deal by referring it to Ofcom, the media regulator.

Should he do so? Of course he should. It would be remarkable if Mr Cable did not at least ask Ofcom to investigate a deal that has the potential to transform Britain's media landscape for ever. That's not to say the final verdict would automatically be to block the takeover, but not even to scrutinise it more closely than is going to be possible over the next fortnight would be an astonishing abrogation of duty.

The problem for Ofcom, and by extension Mr Cable, is that there are no set rules on which the decision about this deal can be made (unlike in Europe, where the Commission is unlikely to block a takeover that seems not to fall foul of its specific competition tests).

The concepts of public interest and media plurality are subjective notions. Moreover, the laws of media ownership are outdated: they were written during a time when pay television was an insignificant player in the broadcasting industry. So, for example, were News Corp to bid for ITV, it would be rejected out of hand because the law bans a newspaper group from owning Britain's main commercial broadcaster. Pay television is not covered by the rules.

Back to subjectivity then. Well, Sky's revenues (albeit not all of them from television) now outstrip those of ITV by a ratio of three to one. It has 35 per cent of the television market, including the BBC, by revenue terms. Though it lags ITV on viewers, by almost any other test it is a bigger prize for anyone seeking a broadcast investment.

Rupert Murdoch's News Corp is not just anyone. It is a business with a 37 per cent share of Britain's national newspaper market. It has a record of aggressively targeting its rivals with loss-leading tactics such as price wars and cross-subsidy, and it has clear and significant political influence.

Does Mr Cable's decision begin to look a little easier? Well, the counter-arguments are that there would be limits on the extent to which News Corp might be able to wield the additional power. For example, one fear of many of those who oppose the deal is that News Corp would seek to turn Sky News into a British equivalent of Fox News, its remarkably right-wing US news channel. In fact, British law on broadcasting impartiality would prevent it from doing so. Another concern is further integration of News Corp's newsrooms, but Mr Murdoch has shown little interest in doing that with his print titles.

That leaves the bigger question of competition: in the context of Mr Cable's powers, whether media plurality would be threatened by this deal. Newspapers, certainly, would be wise to be worried. Sky is a hugely cash generative business that would give News Corp real firepower to launch new price promotions despite the constrained finances of its newspapers. And that's before the huge potential of bundling online subscriptions to the papers with Sky's television channels. Both these threats could certainly damage media plurality (ITN, too, would be fearful). Over to you, Business Secretary.

Playing fair with City bonuses

An unpleasant row over money is brewing in the fund management business, where many companies are already furious about being subjected to a similar sort of regulatory tightening as their banking counterparts, despite having had little or nothing to do with the crisis that triggered the new rules.

In particular, fund managers are unhappy with the rules on bonuses the Financial Services Authority has been suggesting. These require at least 40 per cent of bonuses to be deferred for three years or more, rising to 60 per cent for pay-outs worth more than £500,000. In addition, at least half the awards should consist of shares or other securities, the FSA insists.

Since the regulator first made its intentions clear in the summer, fund managers have been lobbying for a rethink. The final version of the rules was due to be unveiled next week, but the FSA warned yesterday that it is now unable to publish them before the middle of December, because its opposite numbers in Europe have been slow to finalise their arrangements.

Cue outrage from fund managers, who will now be presented with a set of rules they are unlikely to appreciate, only a fortnight before they have to implement them on 1 January next year, just as bonus season begins. Some extensions may be available inspecific cases, but whatever you think about City bonuses, this is acurious way to win broad-based support for regulatory reform.

A very welcome hire for British banking

The surprising news yesterday that Lloyds has managed to poach the UK head of Santander to become its new chief executive rather eclipsed the more significant story that he will be replaced by Ana Patricia Botin. She will become the first woman boss of a major British bank.

Don't make the mistake of thinking Ms Botin's relationship with Santander's chairman, Emilio Botin – he's her dad – undermines her qualifications for the job. Ms Botin is highly regarded across Europe, and her promotion reflects the job she has done in steering Santander's Banesto subsidiary through the financial crisis, despite its exposure to the disaster that is Spain's property market.

Santander is thought to be plotting a London float of its extensive British banking assets, which would mean Ms Botin becoming only the fifth female member of the FTSE 100 chief executives' club. Her appointment is a breakthrough for the City.