LONDON — A final decision on Rupert Murdoch’s biggest takeover battle has been delayed for several months after the British government referred News Corp.’s bid for British Sky Broadcasting PLC to competition authorities, as a phone hacking scandal showed no sign of abating.
The announcement Monday from Culture Secretary Jeremy Hunt followed News Corp.’s withdrawal of a promise to spin off Sky News, which had been a condition for buying the 61 percent of the satellite broadcaster that it doesn’t already own.
Britain’s Competition Commission now must hold a full-scale inquiry into whether the takeover would break anti-monopoly laws. These inquiries usually take six months and Murdoch likely is hoping that the current febrile atmosphere surrounding the bid cools down.
“I think it is a smart move, it allows politicians some wiggle room, it takes all the political pressure off,” Louise Cooper, media analyst at BGC Partners said. She added that Murdoch had done the government a favor by forcing a competition inquiry — a favor which the media mogul will hope to redeem in the future.
News Corp.’s second dramatic move following last week’s decision to close the News of the World, the tabloid newspaper at the heart of the phone hacking scandal, came as the government was facing intense pressure to block the bid from all sides of the political spectrum.
Deputy Prime Minister Nick Clegg urged Murdoch to “do the decent and sensible thing” and reconsider the bid for BSkyB, while Ed Miliband, the leader of the opposition Labour Party, has threatened a Parliamentary vote on the bid.
Murdoch arrived in London Sunday to personally manage the crisis enveloping his media empire, which has seen the share prices of both News Corp. and BSkyB take a battering over the past few days.
BSkyB shares closed down 4.6 percent on the London Stock Exchange, rebounding from earlier lows. By midday New York time, News Corp. shares were down 6.8 percent at $16.16, meaning it has lost around $3 billion in value on Monday alone.
Murdoch has a history of getting out of tight situations in Britain, ever since he took control of the News of the World back in 1969. He hopes that taking the proposed takeover out of the political arena may help him get full control of BSkyB.
“News Corp. continues to believe that, taking into account the only relevant legal test, its proposed acquisition will not lead to there being insufficient plurality in news provision in the U.K.,” the company said.
A failure to clinch the $11.9 billion takeover would be a huge setback for Murdoch, who has built up a global media empire over four decades. The company owns Fox News and the 20th Century Fox film studio, and a raft of newspapers and media outlets all round the world.