British govt lawyers look to block BSkyB bid -paper

LONDON,  (Reuters) – British government lawyers are  drawing up plans to block Rupert Murdoch’s bid to buy out the  broadcaster BSkyB, the Independent newspaper said on Monday — a  move that could spare Prime Minister David Cameron a potentially  damaging parliamentary vote.

Rupert Murdoch

Opposition Labour party leader Ed Miliband said yesterday  that he would force parliament to vote this week if Cameron did  not take steps to halt the $14-billion bid by Murdoch’s News  Corp for the 61 percent of the profitable pay-TV  operator BSkyB that it does not already own.

A vote in parliament could split the coalition between  Cameron’s Conservatives and the Liberal Democrats who,  traditionally less favoured by Murdoch’s media, have signalled  they could vote with Labour on the issue.

It would also give Labour a chance to cast itself, at  Cameron’s expense, as the champion of a public outraged by  allegations that News of the World reporters and editors were  complicit in illegally hacking the voicemails of a murdered girl  and of London bombing victims.

“We are working on a plan to suspend the deal while the  police investigation is taking place,” the Independent quoted a  senior government source as saying. A Downing Street spokesman  declined to comment.

Murdoch’s own Sunday Times reported that a 2007 internal  investigation at the News of the World had found evidence that  phone hacking was more widespread than the company had admitted  and that staff had illegally paid police for information.

Murdoch, 80, flew into London yesterday to take charge of  attempts to save the BSkyB deal and limit the damage to News  Corp, the world’s largest news conglomerate.

As he was driven into his London headquarters, he  conspicuously held up the final edition of the News of the  World, the 168-year-old newspaper he bought in 1969 then  promptly closed last week in a bid to stem the crisis.

Lurid headlines

The paper is best known for its lurid headlines exposing  misadventures of the rich, royal and famous. Its last headline  said simply “Thank You & Goodbye” over a montage of some of its  most celebrated splashes of the past 168 years.

Murdoch later had dinner in an upmarket hotel with his  newspaper group chief executive Rebekah Brooks, a friend of  Cameron’s and editor of the News of the World at the time of the  phone-hacking, and his son and heir apparent, James.

The affair has thrown a harsh spotlight on the long-standing  ties between leading British politicians and Murdoch.

In particular it has called into question the judgment of  Cameron, who hired former News of the World editor Andy Coulson  as his head of communications.

Coulson later resigned, and was arrested on Friday and  released on bail after being questioned by police about  voicemail hacking and payments to police. Coulson denies any  knowledge that hacking was carried out.

Cameron has insisted that the government has no legal power  to block the BSkyB deal if it is satisfied that enough media  plurality — competition — will be maintained. It had already  indicated it would accept News Corp’s assurances on this count.

“Fit and proper”

The Independent said the government had latterly hoped the  broadcasting regulator Ofcom would stop the deal going through  on grounds that News Corp directors were not “fit and proper” to  run BSkyB, but that this was unlikely to happen until a possibly  lengthy police investigation had been completed. Instead, it said lawyers in the department of Culture  Secretary Jeremy Hunt were now looking at using competition  criteria to block the deal.

That would still be embarrassing for the prime minister, but  arguably less damaging than a split with his coalition partners.

Blocking the BSkyB deal on grounds of media plurality would  also be better for Murdoch than if he and his team were found to  be not “fit and proper” to run the broadcaster, as that could  see him lose his existing 39 percent of the company.

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