Claire Enders writes to business secretary arguing he should stop News Corp buying 60.9% of BSkyB it does not already own

This article is more than 10 years old

This article is more than 10 years old

A leading media industry consultant said today that she has written to the business secretary, Vince Cable, arguing that he should block News Corporation's bid for the 60.9% of BSkyB it does not already own, because it represents a "Berlusconi moment" for the UK.

Claire Enders, founder of media consultancy Enders Analysis, said she had also written to the culture secretary, Jeremy Hunt, and broadcasting minister, Ed Vaizey, expressing her concerns about News Corp's plans to take full control of BSkyB.

Enders, a respected commentator and analyst who has advised and worked for many of the UK's biggest media groups, said the proposed takeover represents a "Berlusconi moment" for the country.

This is a reference to the Italian prime minister, Silvio Berlusconi, who owns Italy's biggest commercial broadcaster, Mediaset.

In the 20-page letter, she argues that allowing the proposed deal to go through would represent "a reduction in media plurality to an unacceptably low level" and provides evidence to back up her claim.

Cable has the power to block the takeover on media plurality grounds if he decides it is in the public interest to do so.

"We thought there needed to be an analysis of the combined scale and scope of the enterprise and we were doing that anyway," she added. "Their actual strength in their relative industries are growing quite rapidly in relation to their peers."

Referring to laws passed to limit cross-media ownership in order to prevent a single company wielding too much power, Enders said: "This legislation was designed for transactions of this kind."

In her letter, which she sent to Cable unsolicited six weeks ago and which is published in full on the Beehive City media industry website today, she added that the fact BSkyB currently has City shareholders with no links to the Murdoch family prevents News Corp from using Sky to further its own business interests.

Rupert Murdoch is the chairman and chief executive of News Corp. His son James runs News Corp's European and Asian businesses – including News International in the UK – and is chairman of BSkyB.

If the takeover is approved, Enders predicted it would lead to a fully integrated newsroom, with Sky News and Murdoch's stable of News International papers – the Times, Sunday Times, Sun and News of the World – sharing resources and journalists.

It is also likely to make it easier for News Corp to offer Sky subscribers cheap subscriptions to the company's newspapers and their websites by "bundling" the two together at a lower price, she added.

Although News Corp already exerts a large amount of control over Sky as the pay-TV company's largest shareholder, other investors effectively act as a brake on full integration between the satellite broadcaster and the rest of the group.

They disapprove of any overt co-operation between the two that would adversely effect Sky's profits, including allowing Sky's multibillion-pound annual revenues to subsidise Murdoch's loss-making newspaper titles.

Enders argued that the presence of non-executive directors on the Sky board also influence the company's content.

"Today, the presence of strong independent directors of the company, many of whom have substantial external reputations, helps protect the independence and diversity of what appears on screen, particularly on news programmes," she said.

Enders told MediaGuardian.co.uk she wrote to Cable unprompted because she is concerned about Murdoch's grip on the UK media, particularly in light of recent revelations about alleged phone hacking at the News of the World in the past.

"These are serious issues. This is really a business decision. We feel we may be the only organisation with the expertise to [do this]," she said.

Enders added that it was beyond dispute that Sky's competitors in the areas in which it operates – publishing, broadcasting and news provision – are currently weaker than at any time in the recent past. "Other parts of the media ecosystem are struggling."

She argued that it is increasingly difficult for competitors to use the existing regulatory framework to check Sky's growing market power. "Taking regulatory action against News Corp or Sky is no picnic," Enders said. "Small organisations can't take issues to the competition commission on a whim. It costs millions."

She argued that as an impartial observer of the UK media industry, Enders Analysis is well placed to issue a warning about the potential power of a combined group.

News Corp is likely to formally register its proposed takeover of BSkyB with the European Commission in the next few weeks, triggering a process that could lead to an intervention by Cable.

Cable's Department of Business, Innovation and Skills (BIS) will then have several weeks to decide whether to consider the decision on media plurality grounds.

Separately, the UK competition authorities can also investigate the deal. Cable will take advice from Ofcom before making a decision on whether to block the takeover. Competition issues will be assessed by the Competition Commission and Ofcom.

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