The bid made by News Corporation to spin off Sky News in order to facilitate their takeover of BSkyB has been approved by culture secretary, Jeremy Hunt.
The announcement now clears the way for News Corps £8billion purchase of the remaining 61% of BSkyB it does not possess.
The new deal will see; the loss making news subsidiary spun off where it will be renamed Newco and take shape as a publicly listed company, where it will be funded independently for 10 years.
News Corp will license the Sky News brand for seven years of the operation, with an incentive to renew a possible second funding deal. This will see News Corp undertake a 39.1% stake in the venture, while the existing investors in BSkyB will make up the remaining shareholders.
A 15 day consultation will now determine if Newco will have an independent board and chairman as part of their governing structure.
Not surprisingly, an alliance of media groups opposed to the takeover of BSkyB by News Corp which includes; the Guardian, the Daily Mail, the Daily Telegraph and BT, who are reportedly proposing a judicial review regarding the governments approval of the deal. The alliance described it as “pure window dressing”.
Hunt issued the following statement; “Informed by advice from the regulators, I believe that these will address concerns about media plurality should the proposed News Corporation/BSkyB merger go ahead,” stated Hunt.
“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.”
Hunt stated he was aware of the controversy surrounding the potential merger, and that independent advice had been carefully taken in ensuring a “free and independent press”.
“Throughout this process I have been very aware of the potential controversy surrounding this merger,” Hunt stated. “Nothing is more precious to me than the free and independent press for which this country is famous the world over.
He then went onto say; “In order to reassure the public about the way this decision has been taken I have sought and published independent advice at every step of the way, even when not required to do so by law. And I have followed that independent advice.”
To sum up, Sky News is now set to be spun off as an Independent limited company in the UK, where its shares will be publicly traded. The company will be provided with a 10 year carriage agreement by BskyB to ensure a long-term revenue stream for the company.
The Sky News brand will be licensed by BSkyB to the new company, where it will provide support services and facilities.
The new company will be named Newco.