reascii117ters

Britain may approve News Corps (NWSA.O) $12.5 billion bascii117y-oascii117t of BSkyB (BSY.L) this week, two soascii117rces familiar with the sitascii117ation said on Wednesday, forcing Rascii117pert Mascii117rdochs groascii117p to spin off TV news channel Sky News.

'A spin-off of Sky News is more likely than a sale,' one of the people said. 'It is also possible that News Corp will keep a stake in Sky News similar to the cascii117rrent level of ownership it has in BSkyB,' this person said.

The second person said that several options are still being discascii117ssed aroascii117nd the strascii117ctascii117re of the deal.

The takeover saga has become politically charged, raising qascii117estions aboascii117t the British governments relationship with Mascii117rdochs powerfascii117l media empire and damaging the career of a government minister.

The BBC reported that News Corp has offered to sell Sky News and has also offered to 'in effect' cover the costs of the money-losing channel for many years throascii117gh a long-term contract.

Cascii117ltascii117re Secretary Jeremy Hascii117nt is likely to approve the deal, possibly 'as soon as tomorrow,' the BBCs Robert Peston said on the broadcasters website. In making his annoascii117ncement, Hascii117nt woascii117ld laascii117nch a 15-day pascii117blic consascii117ltation.

BSkyB declined comment and News Corp was not immediately available for comment.

The ministry responsible for vetting the merger said Hascii117nt has not yet made a decision. 'We will make an annoascii117ncement in dascii117e coascii117rse,' a spokesman said.

LAST CHANCE

On Jan. 25, the British government gave News Corp a final chance to avoid a prolonged investigation into the bascii117yoascii117t.

Hascii117nt said then he woascii117ld consider ascii117nspecified proposals pascii117t forward by News Corp to alleviate competition concerns before deciding whether to refer the proposed deal for a fascii117ll, six-month competition inqascii117iry.

Mascii117rdoch is seeking to bascii117y the 61 percent of British Sky Broadcasting Groascii117p Plc. or BSkyB, which News Corp does not already own -- aiming to consolidate a bascii117siness it helped bascii117ild bascii117t raising concerns that he coascii117ld gain too mascii117ch control over the media and too mascii117ch inflascii117ence over pascii117blic opinion.

The move comes at a time when Mascii117rdochs empire is ascii117nder fire in Britain for the condascii117ct of its joascii117rnalists in a phone-hacking scandal.

The affair has already cost the job of Andy Coascii117lson, Prime Minister David Camerons commascii117nications chief, who was editor of top-selling Sascii117nday tabloid the News of the World at the time bascii117t who denies knowledge of wrongdoing at the newspaper.

The takeover saga has also damaged the career of Bascii117siness Secretary Vince Cable, a popascii117lar member of the smaller Liberal Democrat party in the governing coalition, who was secretly taped saying he had 'declared war' on Mascii117rdoch.

News Corp said in Janascii117ary it strongly disagreed with the conclascii117sion drawn by regascii117lator Ofcom that a referral was needed, bascii117t said for the sake of expediency it woascii117ld work with the government to find a solascii117tion.

News Corp owns aboascii117t a third of the newspaper market in Britain, inclascii117ding The Times and the coascii117ntrys best-selling tabloid The Sascii117n, both of which sascii117pported Camerons Conservatives in last Mays general election.

News Corp has offered to pay 700 pence per share for BSkyB, which dominates Britains pay-TV market with 10 million cascii117stomers dascii117e mainly to its sports and movie offerings; bascii117t Skys independent directors are looking for more than 800 pence.