The ramifications of the News of the World phone hacking scandal in the UK have spilled over to Rupert Murdoch’s controversial proposed full takeover of BSkyB much to the fear of the investment community.
The proposed deal which has now been delayed following a statement by UK Prime Minister David Cameron who after a great deal of prevarication on the issue which has rocked the UK media industry , has now said that the decision on whether to finally rubber stamp News Corp’s acquisition of the share in BSkyB that it did not own would now take "some time".
As a result shares in BSkyB has fallen sharply, by more than 5% in morning trading on Friday 8 July, as trading and some among the financial community worry whether the deal is dead in the water.
UK media analyst at broker Charles Stanley broker Sam Hart told the Guardian newspaper: "Murdoch's plan to bid for the satellite operator has been kicked into touch...Shareholders are discounting the possibility that this bid won't happen for the foreseeable future. Some people wonder if it will happen at all. It could take years before the various inquiries have wound up, so the deal has been pushed much further back than anyone would have guessed a week ago."
In a holding statement, the UK Department for Culture, Media and Sport, which has ultimate responsibility for agreeing to the deal said: “The consultation on undertakings in lieu offered by News Corp in relation to their proposed merger with BSkyB [closed] at midday [8 July 2011]. The Secretary of State [Jeremy Hunt] has always been clear that he will take as long as is needed to reach a decision...Given the volume of responses, we anticipate that this will take some time. He will consider all relevant factors including whether the announcement regarding the News of the World’s closure has any impact on the question of media plurality.”
The DCMS added that Hunt would consider carefully all the responses submitted and take advice from the UK Office of Fair Trading and broadcasting regulator Ofcom who for its part issued a statement asking police officers conducting the News of the World phone-hacking inquiry to keep it informed of progress in the criminal investigation into the News of the World.
Ofcom added that it had s a duty to be satisfied on an ongoing basis that the holder of a broadcasting licence is ‘fit and proper’. It said:”It is clearly not for Ofcom to investigate matters which properly lie in the hands of the police and the courts, however we are closely monitoring the situation and in particular the investigations by the relevant authorities into the alleged unlawful activities.”