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E: Edward Hadas  S: Sarah O'Connor

E: Sarah, News Corporation has finally found a way to get its full control of its UK subsidiary BSkyB. The trick is that it’s gonna spin off its news operation Sky News, so it will mean independent and self-sustaining. When we look at this deal, but the first thing to wonder about is what is this little News Corporation knew this news operation that’s no longer gonna to be part of New Corporation? Is it possible that it could be a reasonable operation on its own?

S: Yeah, it’s gonna be a very strange entity I think, because Sky News loses money and I’m not sure it will be self-sustaining. News Corps are to guarantee a sort of subsidy very year for ten years in order to make it if medium investable, but…

E: Traditionally, some part of Murdoch’s view of the world is that it likes the influence of news, and Sky was supposedly brought to Fox News relatively independent. Is this… are they abandoning this thesis? Or are they just have bigger fish to fry?

S: Well, I mean that’s an open question and people will argue that they will still have influence over Sky News, but I mean I think clearly he was soaked in to get the big deal done and BSkyB is what he really wanted that he’s made some kind of sacrifice on Sky News.

E: OK. The question is he hasn’t got BSkyB yet.(No) And we could now have another fight brewing because the independent directors who after all represent sixty percent of shares, they have said they want a very high price, and shareholders not really want a even higher price. What do you think? Are they gonna get it?

S: Yeah, I’ll say so, News Corp initially bid 700p, the independent directors said “Oh, hang on, 800p is the lowest that we would even consider.” Since and then they said “OK. Well, let’s just put off this often till we’ve got a regulatory review”. So now we can come back to that point of how much is BSkyB worth. The share is about 815p now, so that implies that shareholders think that the independent directors are gonna get what they want and some.

E: And what do you think?

S: I’m not sure they should be quite that optimistic. I mean it’s certainly true that over the past year or so, we’ve had some really good results of BSkyB. The cash flow is really starting to built, which…

E: So maybe they want to have them to pay more. And what about News Corp? Why are they doing this? Any theories?

S: What is a funny sort of deal for Rupert Murdoch, he wasn’t the kind of adventurer some Boker Nehring spirit that if become accustomed to…(He’s an old man. He’s an old man.) Maybe so. I mean it looks like it’s a sort of financial deal. He wanted the… He wanted the cash flow, I mean for a long time BSkyB has been investing very heavily. It’s finally getting to the end of that cycle so he can really start to harvest some of that cash. I think he just wanted full control and now it’s a decent right to spend his money.

E: So the man who used to back the company on expansion is now cautiously harvesting cash flow from a successful venture. Well it does look like an interesting deal and we’ll see if he can actually get that cash flow at a reasonable price.