BSkyB targets Pearson as Murdoch tries to tighten grip on British TV

BSkyB, Rupert Murdoch's satellite broadcasting giant, is in talks with a US partner that could lead to a joint bid for Pearson, the media conglomerate which owns the Financial Times, Thames Television and Penguin Books.

The plans are aimed at taking advantage of Pearson's volatile share price, and are based on Sky's determination to expand its control of British television programming in advance of the launch of 200 channels on digital satellite late next year.

It is understood that BSkyB could make an all-share offer for Pearson, with a cash alternative. Pearson was trading last week at 696.5p, giving it a market capitalisation of just under pounds 4bn.

Independent analysts have said the company could be worth as much as pounds 10 a share to a buyer prepared to break it up. That suggests BSkyB might have to bid up to pounds 6bn to win the company, which has a large shareholding - perhaps 20 per cent - controlled by the founding Cowdray family and associated interests.

BSkyB's advisers, Goldman Sachs, are believed to have already started to purchase Pearson shares as a first step towards launching the bid.

It is understood that Pearson itself does not take the possibility of a full bid from BSkyB too seriously. It is more likely, from Pearson's point of view, that BSkyB is "shaking the trees" to see whether the company might be willing to sell its television interests, which management has already considered spinning off as a separate subsidiary.

BSkyB is understood to want the television production interests, including Thames Television, the makers of The Bill and other leading series, and Grundy Worldwide, the makers of Neighbours, the popular soap.

The television businesses would feed Sky's growing broadcasting activities, which have helped fuel the company's huge share price rise in recent months, to hit 691p by the end of last week, for a market capitalisation of nearly pounds 12bn.

BSkyB is also understood to be interested in retaining the Financial Times, Britain's leading financial daily, and would seek to buy the 50 per cent of the Economist not currently owned by Pearson. Any attempt to win control of the FT would ignite controversy, as Mr Murdoch, through News International, already owns the Times, the Sunday Times, the News of the World and the Sun.

Mr Murdoch took a 20 per cent stake in Pearson in the mid-1980s, but was seen off by the Cowdray family and a new management under Frank Barlow.

It is believed that Mr Murdoch would again face significant regulatory hurdles, particularly over BSkyB's control of the FT and a 24 per cent stake in Channel 5. According to new cross-media ownership rules, owners of more than 25 per cent of the national press would be limited to a 20 per cent holding in Channel 5.

The remaining assets, including Madame Tussauds, the theme park group, Penguin Books and Addison-Wesley-Longman, both leading publishers, would be sold.

Some analysts questioned why BSkyB would move now, just after new senior management appointments were announced. The City normally gives new chief executives time to settle in.

Pearson this past week named a new chief executive, US-born Marjorie Scardino, who takes over at the end of the year. Her appointment sent Pearson's shares sliding on the day of the announcement last week, because she was what one media analyst called "an unknown commodity".

BSkyB senior executives, including the chief executive, Sam Chisholm, are believed to respect Ms Scardino's abilities. She is expected to shake up the company, perhaps through her own restructuring of its sprawling assets.