The European Commission’s antitrust investigators say competition would not be weakened if News Corp (NSDQ: NWS) buys the 60.9 percent of UK satcaster and telco BSkyB (NYSE: BSY) it doesn’t already own (case notes).
“News Corp and BSkyB are mainly active in different markets … and compete with each other only to a limited extent – in the wholesale supply of basic pay-TV channels and in the supply of online and TV advertising space,” according to the EC judgement.
Rival news publishers had opposed the deal, though analysts have said implications would be minimal – there has been no indication News Corp wants to bundle Sky News or BSkyB together with News International newspapers.
The UK will ultimately decide on whether to allow the buy-up, after Ofcom publishes its investigation on its effects on media plurality by December 31. News Corp already owns 39.1 percent of Sky, one of the world’s most successful subscription TV businesses; the full takeover was prompted by Sky hitting 10 million customers this year, the pair are yet to agree a price.
The EC’s logic on news publishing is most compelling, speaking to opponents’ bundling fears…
On that basis, either the EC hasn’t noticed that News International absolutely is aiming to make more of its readers multimedia subscribers, or it is suggesting that paid variants of this strategy are bound to fail…
The EC seemed to acknowledge that Sky could refuse advertising space to its competitors, saying that “there are sufficient alternative opportunities to advertise with other print media” and “in any event, News Corp’s refusal would not have a significant impact on subscription rates in the pay-TV market” (a kick in the teeth for Virgin Media).
In premium movies, the EC declared: “News Corp lacks sufficient market power in the market for the licensing of broadcasting rights for premium movies and that BSkyB’s competitors would retain several alternative suppliers with equally attractive content.” The UK’s Competition Commission is already investigating this issue.