BSkyB shares plunge 8% after warning by Ofcom
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Your support makes all the difference.BSkyB shares plunged yesterday after the communications watchdog cast doubt on Rupert Murdoch's bid to buy the satellite broadcaster by saying revelations of phone hacking at News International could determine whether Mr Murdoch's News Corp was a "fit and proper" owner.
The shares fell almost 8 per cent to 750p, taking their decline to 11 per cent in the past three days. Analysts said Ofcom's intervention and the political firestorm surrounding phone hacking at News International's News of the World could scupper the deal.
The watchdog is asking the police, parliamentary committees and other authorities to keep it informed.
In a letter to John Whittingdale, the chairman of the House of Commons Culture, Media and Sport committee, Ofcom said: "We are monitoring the situation closely and in particular the investigations by the relevant authorities into alleged unlawful activities in regard to any evidence or findings of any relevant conduct."
The Culture Secretary, Jeremy Hunt, was ready to wave through the £12bn-plus bid after accepting News Corp's plan to split Sky News from the business. But the alleged hacking of phones of murder victims and relatives of dead soldiers by the News of the World has sparked an outcry over the bid for BSkyB, of which News Corp already owns 39 per cent.
Alex DeGroote, an analyst at Panmure Gordon, said the BSkyB deal could now be doomed and gave it only a 50 per cent chance of success. Mr DeGroote said the closure of the News of the World was "a cynical attempt to improve the prospects of regulatory approval for the News Corp deal with BSkyB". Predicting further falls in BSkyB shares, he added: "We believe it is seriously erroneous to assume the closure of the News of the World improves the probability of the deal getting done."
BSkyB shares, at 750p, are still above the 700p indicative offer News Corp made last June for the rest of the shares. However, some investors have demanded at least 1,100p a share.
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