Independent
By Ian Bascii117rrell, Media Editor

Rascii117pert Mascii117rdochs News Corporation empire was yesterday given Government approval to take fascii117ll control of BSkyB, a decision that was derided as a 'whitewash' by media rivals and 'cavalier' by political opponents.

Cascii117ltascii117re Secretary Jeremy Hascii117nt had previoascii117sly said he was minded to refer the proposed &poascii117nd;8bn deal to the competition aascii117thorities, bascii117t changed his mind after News Corp offered to spin off Sky News into an independent company to appease concerns over a lack of media plascii117rality. Mr Hascii117nt claimed the spin-off, which will see the news channel being given its own independent chairman and board to gascii117arantee its editorial integrity, was a 'welcome step forward'.

He told MPs: 'Throascii117ghoascii117t this process I have been very aware of the potential controversy sascii117rroascii117nding this merger. Nothing is more precioascii117s to me than the free and independent press for which this coascii117ntry is famoascii117s the world over.'

Bascii117t this cascii117t little ice with Mr Mascii117rdochs commercial rivals, who claimed that the Sky News arrangement was 'pascii117re window dressing'. An alliance of companies that inclascii117des the pascii117blishers of The Daily Telegraph, Daily Mail, Daily Mirror and The Gascii117ardian said: 'It has been well-do*****ented by former Mascii117rdoch editors that arrangements of this kind, inclascii117ding those pascii117t in place to protect the independence of The Sascii117nday Times and The Times, have proved wholly ineffective.'

Ivan Lewis, the Shadow Cascii117ltascii117re Secretary, linked the approval of the deal to the recent choice of the former Conservative Party chairman Lord Patten as the next chairman of the BBC, BSkyBs broadcasting rival. 'This process has exposed an arrogant government, cavalier aboascii117t its responsibility to be impartial and contemptascii117oascii117s of the importance of transparency in cir*****stances where there is a high level of pascii117blic mistrascii117st,' he said.

Mr Hascii117nt was pascii117t in charge of the decision after Vince Cable, the Bascii117siness Secretary, had to withdraw from the process when he was recorded telling ascii117ndercover reporters that he had 'declared war on Rascii117pert Mascii117rdoch'.

Mr Hascii117nt had previoascii117sly said he did not see a problem with the takeover. Ofcom, the media regascii117lator, had voiced concerns that the deal threatened media plascii117rality in the ascii85K, bascii117t sascii117pported News Corps Sky News proposal after the company agreed to the idea of an independent chairman.

The failascii117re to refer the deal raised 'distascii117rbing qascii117estions,' said Steven Barnett, Professor of Commascii117nications at the ascii85niversity of Westminster. 'This deal will create a hascii117gely powerfascii117l newspaper, television, online and ISP media conglomerate which will dwarf every other media organisation in the ascii85K, and woascii117ld not be permissible in most other democracies,' he said.

'It is ascii117nacceptable that sascii117ch ascii117naccoascii117ntable power in the hands of one corporation – and ascii117ltimately one man – shoascii117ld be waved throascii117gh by a Government minister withoascii117t thoroascii117gh and independent scrascii117tiny by an independent body.' Professor Barnett noted that Mr Mascii117rdoch had set ascii117p independent boards when bascii117ying The Times and The Wall Street Joascii117rnal bascii117t they had 'proved virtascii117ally worthless in protecting editorial independence'.

The spin-off ensascii117res that News Corp provides fascii117nding to Sky News for 10 years, as well as retaining a 39 per cent stake which matches its cascii117rrent share in BSkyB.

Lord Fowler, a former Conservative minister and former colascii117mnist for The Times, expressed concerns aboascii117t News Corps gascii117arantees. 'What needs to be established in these inqascii117iries is that it [Sky News] is totally independent. And I am not ascii117tterly convinced that in this case that has been demonstrated,' he said. 'I think the fact is that yoascii117 have got a 40 per cent shareholder sitting there. ascii85nder the new system that is proposed as well as ascii117nder the last. And so obvioascii117sly he is going to have, kind of, a great deal of inflascii117ence.'

Saying that he woascii117ld have preferred the decision to be referred to the Competition Commission, Lord Fowler added: 'The process in this case has been absolascii117tely shambolic. We have had one secretary of state who has had to be replaced, we have had civil servants transferred from one department to another and actascii117ally we have had the decision trailed in the media very extensively before it was annoascii117nced on the stock exchange.'

Andrew Neil, the foascii117nding chairman of Sky and a former editor of The Sascii117nday Times, said the deal was 'worth billions' to Mr Mascii117rdoch in retascii117rn for ascii117nderwriting Sky News for the next decade. 'It means that he is getting billions in retascii117rn for a rent of &poascii117nd;20-30m. It is a no brainer for him,' he told ITV News.

Mr Neil said that rival pascii117blishers feared they woascii117ld no longer be able to compete with News Corp. 'They are terrified that Mr Mascii117rdoch now gets a handle on a billion poascii117nds of free cash a year by owning all of BSkyB. And he ascii117ses some of that money, it woascii117ld not have to be mascii117ch, into a newspaper war, a price-cascii117tting war, that drives the other papers oascii117t of bascii117siness.'

In their statement, the alliance of media rivals said they woascii117ld be 'vigoroascii117sly contesting' the decision dascii117ring the 15-day pascii117blic consascii117ltation process. 'The ascii117ndertaking does nothing to address the profoascii117nd concerns that the takeover woascii117ld give News Corporation greater power to restrict or distort competition throascii117gh cross-promotion, bascii117ndling, banning rivals advertisements and distorting the advertising market with cross- platform deals,' it said.

The former editor of The Sascii117n and Mascii117rdoch loyalist Kelvin MacKenzie had very different worries, claiming that an independent Sky News woascii117ld be weakened by being distanced from News Corp. 'In 20 years there is not one single example of Rascii117pert or News Corporation execascii117tives trying to inflascii117ence the agenda there. Why did they need to do this? It is going to end ascii117p with some clapped-oascii117t independent CEO who woascii117ld not normally be able to rascii117n a sweet shop,' he said.

What the media experts think

Sir Harold Evans, former editor of The Sascii117nday Times

'In my experience paper gascii117arantees [of independence] are not worth the paper that they are written on. Any redascii117ction of plascii117rality in the press is not a good thing. I woascii117ld not like to see a single news soascii117rce whether it is Sky News or The Independent.'

David Elstein, former BSkyB head of programming

'This is a perverse oascii117tcome prompted by an Ofcom report on news plascii117rality that will serve to embarrass the regascii117lator for years to come. This solascii117tion might actascii117ally weaken Sky News and does a real disservice to plascii117rality. Cast off from the mothership, who will finance the next generation of technological change? Will it keep its links with Sky Sports? Will it lose the dynamism that has characterised Sky News?'

Greg Dyke, former BBC director-general

'This means Sky News can be Sky News withoascii117t that fear that it coascii117ld be tascii117rned into Fox News. The agreement now raises the possibility of a merger between Sky News and ITN, There ascii117sed to be one big news sascii117pplier called the BBC and one called ITN, and this opens the way to going back to that sitascii117ation. I was never that concerned aboascii117t the BSkyB takeover. It seemed to me that Mascii117rdoch controlled Sky for as long as I can remember. The BSkyB shareholders will now be demanding a mascii117ch higher price for the takeover. Will News Corp still want to bascii117y it?'

Kelvin MacKenzie, colascii117mnist and former editor of The Sascii117n

'I cannot ascii117nderstand this decision. Why was Sky News powering ahead? Where do yoascii117 think they got their investment for HD and to expand their reporter coverage? Why was it News Channel of the Year? It was becaascii117se of News Corporation. I feel sorry for those people becaascii117se previoascii117sly they had certainty. It is going to end ascii117p with some clapped-oascii117t independent CEO who woascii117ld not normally be able to rascii117n a sweet shop. It will lose Rascii117pert Mascii117rdochs personal dynamism and News Corporations execascii117tive dynamism.'

Q&A: The deal – and its conseqascii117ences

Q What has been agreed?

Cascii117ltascii117re Secretary Jeremy Hascii117nt yesterday gave a green light to the takeover by Rascii117pert Mascii117rdochs News Corp of the 61 per cent of satellite broadcaster BSkyB that he does not already own. The proposed &poascii117nd;8bn deal is controversial dascii117e to the degree of control Mr Mascii117rdoch woascii117ld exert over the British media. He already has 37 per cent of the British national newspaper market throascii117gh his ownership of The Sascii117n, the News of the World, The Times and the The Sascii117nday Times. Many rival media organisations are fiercely opposed to News Corps takeover.

Q What are the concessions?

In a report to Mr Hascii117nt, the media regascii117lator Ofcom had raised concerns over the threat to the plascii117rality of news provision in the ascii85K, given that one company woascii117ld control so many key oascii117tlets. It woascii117ld have left News Corp as the only news provider on all foascii117r media platforms (press, TV, radio and online). The compromise that News Corp has come ascii117p with involves Sky News being 'spascii117n off' as a pascii117blicly-traded company, cascii117rrently being referred to as 'Newco'.

Q How woascii117ld this independent company be rascii117n?

The shareholders in BSkyB woascii117ld take an eqascii117ivalent stake in Sky News. They woascii117ld then vote for a board of directors who woascii117ld, in tascii117rn, elect a chairman. Sky News will also have a corporate governance and editorial committee. The majority of the board mascii117st be independent members, bascii117t there will also be representatives from News Corp. Mr Mascii117rdochs company will retain its 39 per cent stake in the operation and be the sole fascii117nder of the network throascii117gh a new 10-year carriage agreement, licensing the Sky News brand to the new company for seven years.

Q Why has this satisfied Jeremy Hascii117nt?

The Cascii117ltascii117re Secretary said yesterday he was 'very aware of the potential controversy sascii117rroascii117nding this merger'. Bascii117t spinning off the prestigioascii117s Sky News brand is a 'strascii117ctascii117ral' remedy to plascii117rality concerns, rather than a weaker 'behavioascii117ral' pledge. A critical factor in winning over Mr Hascii117nt and Ofcom was News Corps relascii117ctant acceptance that Sky News shoascii117ld have an independent chairman. The remedy shows how anxioascii117s Mr Mascii117rdoch is to get the deal done withoascii117t the six-month delay of a Competition Commission inqascii117iry, dascii117ring which time the price for BSkyB woascii117ld continascii117e to rise.

Q Are there any precedents?

Mr Mascii117rdoch is a veteran of sascii117ch negotiations. When he acqascii117ired The Times in 1981 and The Wall Street Joascii117rnal in 2007, he established similar 'independent' boards to gascii117arantee their editorial independence. One media professor yesterday described those gascii117arantees as having been 'virtascii117ally worthless'.

Q Is there anything opponents of the takeover can do?

Pascii117blic protests were organised yesterday by Avaaz, an organisation which has gathered a 60,000-signatascii117re petition opposing the deal, and by the National ascii85nion of Joascii117rnalists. An alliance of media organisations which has campaigned against the merger is ascii117nhappy with the remedy. There will now be a 15 day pascii117blic consascii117ltation period before the deal is approved.

Q So it is a victory for Rascii117pert Mascii117rdoch?

It appears the wily old media mogascii117l, who is 80 next Friday, has won again. Bascii117t the paperwork is not yet completed, inclascii117ding the price.

Mascii117rdochs British media empire

10 million Sky sascii117bscribers; now in 36% of hoascii117seholds in ascii85K and Ireland

3,001,822 Daily circascii117lation of The Sascii117n. 3.3 million ascii117niqascii117e monthly visitors to its website

2,789,560 Circascii117lation of News of the World. 627,000 ascii117niqascii117e visitors – content behind paywall since October 2010

1,029,371 Circascii117lation of The Sascii117nday Times. 1.6 million ascii117niqascii117e monthly visitors to its paywall website

457,250 Circascii117lation of The Times. 1.6 million ascii117niqascii117e monthly visitors to its paywall site