Can News Corp split help deliver Murdoch his BSkyB dream?
Several analysts refuse to believe hiving off newspapers will help media magnate win over Ofcom
THE confirmation that Rupert Murdoch's News Corp is considering splitting its TV and film business from its publishing and newspaper enterprises has been widely interpreted, in part, as an attempt to relaunch the media magnate's bid to to take full control of BSkyB, a move that famously failed as a result of the phone-hacking scandal at the News of the World. But can such a split really help achieve that?
Spencer Wang of Credit Suisse is quoted in the Financial Times as saying the split might allow the bid to pass Ofcom's 'fit and proper' test, designed to ascertain whether News Corp representatives are fit to run a broadcasting company in Britain.
However, other analysts disagreed, with Bernstein Research saying: "We believe the political acceptance of [a renewed BSkyB bid] is unlikely" while Douglas McCabe of Enders Analysis said: "There will still be questions about what media they own generally and that doesn't change".
Becket McGrath of law firm Edwards Wildman Palmer reached a similar conclusion in the Guardian. "The presumption is that separating the operations into two businesses will not make any difference to a plurality analysis if there was another attempt to takeover BSkyB. The businesses would still be treated as one group."
Taking a wider view, the Daily Telegraph head of business, Damian Reece, said that "if News Corporation pushes ahead with plans to split, it would reveal a company regaining some of its poise". He notes that shareholders would wholly welcome the move in the hope that the entertainment division would receive a better market valuation.
And two unnamed sources told the FT that the reason for the split had nothing to do with the BSkyB bid. They claimed that Rupert Murdoch's "dislike of reactive moves" would make it unlikely for him to respond to the hacking scandal by proposing such a plan."This is in keeping with the whole view of [the Murdochs] as buccaneers," one source said.