NewsCorp in ‘competition blow’ over Sky deal

Rupert Murdoch's News Corporation faced a setback today after reports that its £8 billion buyout of BSkyB would be subject to a full competition investigation.

Media regulator Ofcom has recommended the Competition Commission examine News Corp's efforts to buy the 61% of BSkyB that it does not own already, the BBC said.

The deal has proved hugely controversial amid worries over the influence of News Corp, which owns UK newspapers including the Times and the Sun.

Business Secretary Vince Cable was stripped of responsibility for deciding on the deal last month after unwittingly revealing to two reporters he had "declared war" on Murdoch.

Ofcom, which refused to comment, submitted its recommendations to Culture Secretary Jeremy Hunt on December 31. He is set to announce his decision in the coming weeks although either way it is likely to face a court challenge. Analysts said the Competition Commission would be able to make judgments on the political and social impact of a perceived concentration of media powers better than Ofcom, which is more conditioned to regulating easily measurable factors like customer numbers and charges.

Daniel Stewart Securities analyst Michael Jeremy, said: "This makes it more likely that there will be a delay to this deal. Most expect that News Corp will get its way though."

In a speech today at the London School of Economics, Hunt said he would be a "fair arbiter" but added: "This is a decision which is likely to be judicially challenged by whichever side opposes the outcome."

The deal has faced opposition from other broadcasters as well as competitors including BT and even the Church of England. News Corp won clearance for the deal from the European Union last month.