Vince Cable intervenes in News Corp BSkyB bid

Business Secretary Vince Cable today said he was intervening in News Corp's £12 billion bid to take control of broadcasting giant BSkyB and would refer the plans to regulator Ofcom.

Mr Cable stepped in on public interest grounds over media plurality following mounting pressure from rival media groups after Rupert Murdoch's News Corp made an offer for the 61% of BSkyB that it does not already own.

The intervention notice served requires Ofcom to investigate the proposals and report back by December 31.

Mr Cable said he made the move after submissions and information regarding News Corp's approach.

British media groups - including national newspaper owners and broadcasters - recently joined forces to petition Mr Cable to block the plans over fears the deal posed a threat to competition and media plurality.

News Corp's rivals argue the takeover would create an organisation of unrivalled power in the UK media sector.

If the deal went ahead, News Corp would have a dominant position in newspapers, owning UK titles including The Times and The Sun, while also having full ownership of a pay TV company - an empire with an estimated turnover of £7.5 billion.

Mr Cable said: "On the basis of the information and submissions available to me, I have decided that it is appropriate to issue an intervention notice in this particular case.

"The independent experts at Ofcom will now investigate and report to me on the media plurality issues that may arise from this proposed acquisition."

The European Commission was notified formally yesterday of the bid and will launch a probe looking at competition issues, to publish a report on December 8.

Mr Cable will decide whether to refer the matter to the UK's Competition Commission once he has Ofcom's report at the end of the year.

But the commission would only consider the potential impact on public interest, given the European Commission's inquiry on competition grounds.

News Corp's aims to take BSkyB private were first revealed in June when Sky said it had rebuffed an initial approach.

The 700p-a-share proposal valued FTSE 100 listed BSkyB at around £12 billion.

Sky said it significantly undervalued the business and called for an offer in excess of 800p a share.

Despite their differences over price, the two parties agreed to begin work on the regulatory process required for a tie-up.

The proposals are seen as a test of the Government's attitude to media consolidation and the power of the Murdoch empire.

It is thought the coalition government has been split on its approach to the proposals, with Conservative ministers understood to be more relaxed over Mr Murdoch's move than Mr Cable and other Liberal Democrats.

Labour also stepped in ahead of today's announcement, calling for Mr Cable to intervene.

Shadow culture secretary Ivan Lewis said: "Rupert Murdoch and BSkyB have been a force for good in improving the quality of broadcasting for British consumers and stimulating investment in our creative industries.

"But the Murdoch empire has sometimes crossed reasonable boundaries with overzealous business practices and the assertion of political power.

"There is a case to answer, and the public interest can only be determined through proper scrutiny by the competent authorities."

He added: "It is important for democracy in Britain that the power to influence opinion and shape debate is in the hands of a broad range of organisations and prevents any one organisation dominating the landscape."

News Corp has been a major shareholder of BSkyB since the launch of the broadcaster in 1989. It currently owns 39.1% of the company.

Mr Murdoch's son James is BSkyB's chairman and a senior executive at News Corp, but is not involved in the bid process.

News Corp said it was "confident that the proposed investment will not adversely affect media plurality" in the UK.

It added the group "looks forward to discussing any substantive issues with the relevant authorities".

BSkyB issued a brief statement, saying only that it "notes" Mr Cable's announcement.

But there was praise for the Business Secretary's decision among trade unions.

TUC general secretary Brendan Barber said: "Vince Cable has done the right thing today.

"This decision was a key test for the new Government. This was not just about whether it will stand up to the Murdoch business empire, but whether it will adopt a more robust approach to mergers and acquisitions in general."

Asked whether Prime Minister David Cameron supported Mr Cable's decision, a Downing Street spokeswoman said: "He is a member of the Government. He supports the decisions made by his Cabinet."

She added: "The Prime Minister is already on the record as saying this is a matter for the Business Secretary. The Business Secretary has made his decision and it is now a matter for Ofcom. The Prime Minister is fully aware of the decision being made."