Murdoch Forces UK Chancellor Between Rock and a Hard Place

23 January 2007

LONDON: "Politics," famously pronounced Rab Butler, reputedly the best Tory prime minister Britain never had, "is the art of the possible". In the dilemma currently thrust upon him by Rupert Murdoch, the nation's prime-minister-in-waiting, chancellor Gordon Brown, might instead perceive it to be "the art of the impossible".

He is faced with an unenviable choice, urged by Murdoch-controlled UK satellite monopoly BSkyB to oppose regulatory intervention over its acquisition of a 17.9% spoiling stake in the nation's largest commercial broadcaster ITV.

The Sky stake effectively torpedoed what would have been a 'friendly' merger between ITV and US cable operator NTL - whose largest shareholder is the nation's favourite entrepreneur Sir Richard Branson.

The Office of Fair Trading and media regulator Ofcom are currently reviewing the competition aspects of the Sky stake and whether it constitutes "a change of control at ITV". Ofcom has already opined that the BSkyB move might have created a "relevant merger situation".

Trade and industry secretary Alistair Darling is expected to announce this week whether he will order Ofcom to review the public interest issues raised by BSkyB's moves - but he could be influenced by Brown on any referral, which a government insider describes as a "legal minefield".

Brown's failure to intervene would alienate a media mogul with the muscle to adversely influence the chances of Brown's New Labour party at the next UK general election.

But his intervention would not only anger NTL and Branson, it would also trigger charges of bending the knee to Clan Murdoch. Which in turn would adversely influence New Labour's electoral chances.

As the old proverb has it: "There is small choice in rotten apples."

Data sourced from Financial Times; additional content by WARC staff