BSkyB shares hit by fears of phone hacking fallout

AP News
Posted: Jul 07, 2011 8:07 AM
BSkyB shares hit by fears of phone hacking fallout

Shares in British Sky Broadcasting continued to fall on worries that News Corp.'s takeover bid may be blocked because of the phone hacking scandal at its tabloid News of the World.

Shares were down 1 percent at 819 pence at midday, recovering from earlier lows on the London Stock Exchange. Shares had closed at 850 pence on Monday, before it was alleged that the newspaper had hacked the phone of murdered schoolgirl Milly Dowler.

Rupert Murdoch's News Corp., the paper's owner, has gained preliminary clearance by the government to bid for the 61 percent of BSkyB shares it doesn't own. Some British politicians, however, have called for the deal to be blocked.

Robert Peston of the British Broadcasting Corp. reported that Culture Secretary Jeremy Hunt would delay a decision on BSkyB until September, but Hunt's department said no date had been set for an announcement.

A consultation period on Hunt's final proposals for clearance ends on Friday. The department said it had received more than 10,000 comments on the proposal but refused to say how many were for or against the deal.

Sam Hart, analyst at Charles Stanley & Co., said investors are clearly worried. He is confident, however, that News Corp. would table an offer despite the furor.

"Obviously the market is thinking that there is a possibility that News Corp.'s takeover of BSkyB could certainly be delayed, if not blocked," Hart said.

"It's very difficult to make a judgment how the political side of things will play out."