CHICKEN LITTLE WAS RIGHT: THE BSKYB (DEAL) IS FALLING

Rupert Murdoch may have shut down his 168-year-old London tabloid, the News of the World, over the weekend, but the scandal that had consumed the newspaper continued to burn in other parts of his media empire. Most significantly it appears to have doomed Murdoch’s bid to acquire the 61 percent of satellite broadcaster BSkyB that he doesn’t already own. Addressing Murdoch via a BBC interview show earlier today (Monday), Deputy Prime Minister Nick Clegg said, “Do the decent thing, and reconsider, think again about your bid for BSkyB.” If Murdoch doesn’t voluntarily withdraw his bid, it seemed clear that he will be blocked by British regulators or perhaps even by a vote of Parliament. In a BBC interview, Labor leader Ed Miliband said, “I say this to the prime minister candidly. Over the next 72 hours I hope he changes his position on this because I don’t want to force this to a vote of the House of Commons.” In an interview with Reuters, Alex DeGroote, an analyst with the U.K. stock brokerage/investment bank Panmure Gordon said, “We believe the deal is all but dead.” On the other hand, BTIG media analyst Richard Greenfield wrote, “We continue to believe News Corp will ultimately end up acquiring 100 percent of BSkyB; however, we could envision the transaction taking another year or more to occur.” On Sunday Murdoch flew to London to assess the damage that the scandal has inflicted on his media empire and to contain it. Earlier in the day, Britain’s Guardian newspaper reported that longtime Murdoch adviser Les Hinton will likely be questioned about whether he saw a 2007 internal company memo indicating that phone hacking by News of the World reporters was more extensive than the company had admitted. Hinton, who at the time headed News International, the umbrella group for Murdoch’s U.K. newspapers, has continued to hold to the party line that the hacking had been limited to one “rogue reporter” working with a private detective. The London Independent quoted a source as saying that the internal report amounts to a “ticking time bomb” that supports the charge that there was a deliberate cover-up by executives of News International of the hacking activity. Meanwhile, Assistant Commissioner of the Metropolitan Police John Yates, took a 180-degree turn over the weekend, admitting that he felt “massive regret” over not opening Scotland Yard’s inquiry into the phone hacking after police received evidence that it was more widespread than initially believed. He told the London Sunday Telegraph that his decision not to reopen the probe had been “a pretty crap one.” Scotland Yard has been accused of “looking the other way” when confronted with the hacking charges in order to court favor with News of the World reporters, who sometimes provided leads for its investigators (and payments, too, if some allegations are to be believed). “My byword has always been you look after the victims and the job will always resolve itself. I always put the victim first but here I didn’t follow my principle and that is my greatest regret,” he said.