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Vince Cable refers News Corp BSkyB takeover to Ofcom

UK business secretary Vince Cable has instructed regulator Ofcom to look into News Corp’s proposed full takeover of BSkyB, following News Corp’s application to the European Commission to go ahead with the acquisition.

Cable has issued a notice under the Enterprise Act instructing Ofcom to investigate the acquisition on public interest grounds. The regulator now has until the end of the year to look into the impact on UK media plurality of News Corp’s purchase of the 61% of BSkyB that it does not already own.

News Corp said it was “confident” that the investment would not have an adverse impact on media plurality and said it would discuss any substantive issues raised by the enquiry.

The European Commission, meanwhile, is set to undertake a preliminary investigation of its own into the deal on competition grounds and is expected to decide by December 8 whether to launch a fuller investigation.

Cable’s referral of the deal to Ofcom follows submissions by an alliance of broadcasters and newspaper groups that the takeover would have a negative impact on plurality.

“This should not come as a real surprise. Political lobbying has been fierce in recent months and this enables him to defer a decision to the independent regulator, effectively absolving him of the need to make a politically sensitive choice. The decision to leave the anti-trust review to the EU authorities will be seen as good news; News Corp have worked hard behind the scenes since announcing this deal to address any potential issues,” said Tim Daniels, TMT Strategist at Olivetree Securities. “The anti-trust picture is straightforward; this really is only a question of public-interest in the UK. Expect to see a lot of debate on this in coming months. We would be surprised to see any real weakness in BSkyB shares today. It is only the speed of Cable’s intervention which raises any eyebrows for us.”