News Corp.’s controversial bid to take complete control of the BSkyB (NYSE: BSY) network faced growing doubts Monday as investors dumped shares of the media conglomerate as well as its quarry. Shares of News Corp (NSDQ: NWS). were down over six percent in early trading on the NASDAQ, while shares of BSkyB fell as much as 7 percent on the London Stock Exchange.
The stock sell-offs came after U.K. Culture Secretary Jeremy Hunt asked government regulators whether News Corp.’s bid for the satellite broadcaster was still “credible” in the wake of the the phone-hacking and police payoffs scandal that has already claimed Rupert Murdoch’s News of the World tabloid.
They may be exacerbated by the latest turn of events: rather than withdraw completely, Murdoch is pulling back on the planned spin off Sky News, agreed to as part of the effort to gain consent for the deal, and has promised to cooperate with the Competition Commission on a review.
“Should the Secretary of State for Culture, Olympics, Media and Sport decide on this basis to refer the proposed transaction to the Competition Commission for a detailed review, News Corporation is ready to engage with the Competition Commission on substance,” the company said in a statement. “News Corporation 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 UK.”
Hunt later said he would refer the merger to the Competition Commission; his failure to do early in the process led to claims that due diligence was being ignored to give Murdoch a pass. In a press conference today, Hunt repeated that he was following the regulations.
That move may be drowned out by new reports of illicit activities that involve the Sun and the Sunday Times digging in medical and bank records of former Prime Minister Gordon Brown — and by a report that the NotW hacked the voice mail of Prince Charles and his wife.
In another development in the fast-moving scandal, a group of News Corp. shareholders has updated a complaint filed in March against the company to include the phone-hacking scandal, The Telegraph reported. News Corp.’s management and board have overseen a “piling on of questionable deals, a waste of corporate resources, a starring role in a blockbuster scandal, and a gigantic public relations disaster,” said Jay Eisenhofer of Grant & Eisenhofer, the law firm that filed the suit in Delaware, according to The Telegraph.
Developing, more as warranted. Meanwhile, here’s Guardian‘s live blog.
On July 15, Guardian issued a retraction for reporting that the Sun obtained illegal access to Gordon Brown’s family medical records