An unguarded comment by UK Business Secretary Vince Cable has seen the politician stripped of powers to regulate media and telecoms and could ultimately boost the chances of approval for News Corporation's planned takeover of BSkyB.
Undercover reporters from the Daily Telegraph recorded Cable saying he had 'declared war on Mr Murdoch' and was 'going to win'. Cable is one of the senior members of the left-leaning Liberal Democrat party, the smaller partner in the coalition government with the Conservatives.
This development, which came just hours after the European Commission gave approval for the News Corporation/BSkyB deal, has wide ranging implications for media and business in the UK. Responsibility for all competition and policy issues relating to media and telecoms was immediately passed to the Secretary of State for Culture, Media and Sport, with the government saying Cable would play no part in the decision relating to the BSkyB takeover. BSkyB said it was 'shocked and dismayed' by the comments.
Despite being passed by the EC, News Corporation's purchase of the 60 per cent of BSkyB not already owned still has to pass the hurdle of UK government approval. Media regulator Ofcom is currently reviewing the case on grounds of media plurality and would have reported to Cable by year end. That report will now go to the Department of Culture, Media and Sport for final ruling.
It seems highly unlikely that government can now block the deal without a massive backlash. But the implications surely run deeper. Even if News Corporation's take over of BSkyB is given the green light, the comments will continue to provide ammunition to the company for years to come. Regulatory bias across Europe against Rupert Murdoch and News Corporation is often speculated upon, but has never been so clearly stated.