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Minister Backs News Corp. on BSkyB Deal

    The British government cleared the way on Thursday for News Corp.’s politically charged plan to take over the biggest British pay television company, British Sky Broadcasting, after News Corp. agreed to spin Sky’s news division off into a separate company.
    Jeremy Hunt, the culture secretary, said he thought the proposal, under which News Corp. would maintain its stake in Sky News, was enough to address rival news organizations’ concerns that the merger would reduce ‘‘media plurality’’ in Britain, where News Corp. also owns influential newspapers like The Times and The Sun.
    ‘‘The undertakings offered would ensure that shareholdings in Sky News would remain unchanged, and indeed offer it more independence from News Corporation than it currently has,’’ Mr. Hunt said in a statement.
    News Corp. already owns 39 percent of the pay-TV company, known as BSkyB, a hugely successful satellite broadcaster with 10 million customers in Britain. Analysts say Rupert Murdoch, the chief executive of News Corp., has been eager to take full control to benefit from Sky’s steady flow of earnings and, perhaps, to make it easier to sell other News Corp. media services to Sky customers.
    The deal is sensitive because of Mr. Murdoch’s proximity to political power in Britain, where he has been welcomed to 10 Downing Street by former Prime Minister Tony Blair and the current resident, David Cameron. During the election campaign last year, The Sun and The Times switched their allegiance from Mr. Blair’s Labour Party to the Conservatives, which emerged at the head of a coalition with the Liberal Democrats.
    Political tension over the proposal heightened in December, when the business secretary, Vince Cable, a Liberal Democrat, was recorded by undercover reporters as saying he had ‘‘declared war’’ on Mr. Murdoch. After that disclosure, Mr. Cameron stripped Mr. Cable of responsibility for the merger review and handed the dossier to Mr. Hunt, a Conservative.
    ‘‘Throughout this process I have been very aware of the potential controversy surrounding this merger,’’ Mr. Hunt said. ‘‘Nothing is more precious to me than the free and independent press for which this country is famous the world over.’’
    Mr. Hunt’s decision not to refer the deal to Britain’s Competition Commission, an independent body that watches mergers and regulated industries, remains subject to a public consultation that expires March 21. However, analysts said it was now all but certain that the merger would go ahead.
    ‘‘Rupert Murdoch, if he had one, would have sold his granny to get the rest of BSkyB,’’ Andrew Neil, former editor of The Sunday Times, told BBC radio. ‘‘It’s worth billions to his balance sheet, so if he has to warehouse or spin off Sky News for a period, he’s happy to do that.’’
    Under the agreement announced Thursday, Sky News would be spun off to existing shareholders of BSkyB, but the new company would be overseen by a board with a majority of independent directors and an independent chairman. Currently, the BSkyB nonexecutive chairman is James Murdoch, a son of Rupert Murdoch and the head of News Corp.’s European and Asian operations.
    There would also be a corporate governance and editorial committee made up of independent directors, and News Corp. would not be allowed to increase its stake in the new company for 10 years without government permission.
    A group of rival media organizations that oppose the deal — including the telecommunications company BT and the publishers Guardian Media Group, Associated Newspapers, Trinity Mirror, Northcliffe Media and Telegraph Media Group — called the proposed spinoff a ‘‘whitewash’’ and said they planned to contest it during the consultation period.
    ‘‘Smoke and mirrors will not protect media plurality in the U.K. from the overweening influence of News Corp.,’’ they said in a statement.
    The group complained that the agreement would do nothing to prevent News Corp. from bundling together various media products and services to customers of Sky, which already sells broadband connections alongside pay-TV packages. Rivals contend that this could hurt competition.
    News Corp. said in a statement that it continued to maintain that the takeover would not harm competition but had proposed the spinoff of the news division ‘‘in order to avoid a lengthy and costly review by the Competition Commission.’’
    News Corp. has yet to agree on a price for the acquisition of the 61 percent of Sky it does not own, but the broadcaster’s board has said it would be willing to accept an offer of more than £8 per share. That would give the whole company a valuation of at least £14 billion, or $22.8 billion.

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Minister Backs News Corp. on BSkyB Deal

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