LONDON (AP) — Nearly a billion dollars was wiped off the value of satellite broadcaster British Sky Broadcasting PLC Friday after British Prime Minister David Cameron indicated that the government was not going to wave News Corp’s bid for the company through any time soon.
In a hastily arranged press conference, Cameron said the government was doing everything by the book but that a final decision on News Corp.’s bid would take “some time” given recent events.
His comments were later echoed by Culture Secretary Jeremy Hunt, who is assessing News Corp.’s attempt to bid for the 61 percent of shares in BSkyB that it doesn’t already own. Hunt remains under pressure from opposition politicians to refer the bid to the Competition Commission for a full-scale monopoly review which could delay a decision even further.
With the decision pushed further out into the future, investors extended a slide in BSkyB’s share price that began on Tuesday as public fury mounted over phone hacking by the Sunday tabloid News of the World, which is part of Rupert Murdoch’s British press holdings.
By late morning London time, BSkyB’s share price was down 4.6 percent at 775 pence ($12.36). That means the company’s market value has lost around 600 million pounds ($950 million).
James Murdoch, his father’s heir-apparent, announced Thursday that the paper will close after this Sunday’s edition. Many observers saw the dramatic announcement to close the scandal-ridden tabloid as a ruse to save the BSkyB bid.
Alex DeGroote, analyst at Panmure Gordon, called the closure “a cynical attempt to improve the prospects of regulatory approval for the News Corp. deal with BSkyB” which is unlikely to work.
DeGroote said it was now more likely that OFCOM, the communications regulator, will have to review its position that News Corp. executives are “fit and proper” persons to hold a broadcasting license.
“Leaving the legalities to one side, we cannot believe it makes political sense for a fragile coalition (government) to let this pass without thorough and fresh scrutiny,” he said.
The closure of the News of the World was having repercussions all across the British media sector. Shares in Trinity Mirror PLC were up around 7 percent, while those of Daily Mail & General Trust PLC spiked over 1 percent as investors conclude that their Sunday publications will be able to pick up readers from the axed News of the World, which was the most read British newspaper.