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British Sky Broadcasting (LON:BSY) report: Cable’s voice

Contributed by Daniel Stewart & Company

By Daniel Stewart & Co

- Business Secretary Vince Cable has initiated (Nov. 4th) a review by Ofcom into News Corp.'s bid to buy the remaining 60.9% BSkyB, on the basis that the move might reduce diversity in U.K media. This follows on News Corp.’s appeal to the EU to approve the deal. Ofcom will report by yearendas the basis for a possible referral to the Competition Commission, which could initiate a lengthy review process. The European Commission has set a provisional date of Dec. 8 to complete its review.

- Although the announcement is not a surprise, Vince Cable is widely seen as a sceptic, with the view (promptly denied by the government) that Liberal Democrats remain aggrieved by News Corp.’s press coverage of the election campaign.

- One result might be concessions such as divesting some assets such as Sky News.

- Our view is that the review (as a riposte to News Corp.’s appeal to the EU) is of parallel significance to the issue of valuation in the light of Sky’s strategy as its 10m DTH subscriber target nears fruition.