How to rescue a deal – the News Corp way

So, fresh from closing down the News of the World and arriving in the UK himself to oversee the fall out of the hacking scandal, Rupert Murdoch has once again demonstrated that when there is something in the corporate world he wants he pursues it aggressively.

When News Corp originally started to pursue the remaining stake in BSkyB that it did not own, in order to remove the need for the deal to be referred to the competition authorities, News Corp agreed to consider separating Sky News out of BSkyB. This was down to broad concerns that Mr Murdoch, with total control of BSkyB and subsequently Sky News, would have too much influence over public opinion given all of his other media titles.

By announcing late yesterday afternoon that News Corp has withdrawn its plan to spin off Sky News, this immediately left the British Culture Minister Jeremy Hunt with no choice but to refer the deal to the Competition Commission.

This is a canny move by Mr Murdoch for a number of reasons. Firstly whilst delaying the deal significantly, as it will take a number of months for the Competition Commission to reach its conclusion, it also takes the deal directly out of play in terms of a decision needed from the British government. Mr Murdoch is a supporter of Mr Cameron and the Conservatives, but there is no doubt that public opinion would not favour the Tory party if they allowed the deal to proceed. It’s now been taken out of their hands.

Secondly, the Competition Commission will be much more focused on the legal implications of the transaction and not the moral implications, thus allowing time to pass and potentially public opinion to soften on News Corp.

And finally Mr Murdoch is now minus one media title, and a significant one in terms of circulation, thus he can argue that his domination of British media is reduced.

This is a story that the rest of the media will try to continually run with thus there remain many twists and turns in the future of this particular deal.