James Murdoch ‘furious’ over plans to block BSkyB takeover bid, Leveson inquiry told

LONDON< The Conservative minister overseeing the Murdoch bid to take over satellite broadcaster BSkyB warned the Prime Minister that James Murdoch was furious over the government’s handling of it and “if we block it, our media sector will suffer for years”, the Leveson inquiry heard last night.Secretary of state and minister for media Jeremy Hunt wrote a memo to Prime Minister David Cameron in November 2010 in which he said it would be wrong to “cave in” to objections that the takeover would give one media outlet too much power. He warned that James Murdoch was “pretty furious” that another minister, Liberal Democrat Vince Cable, had referred the bid to media regulator Ofcom for scrutiny. “He doesn’t think he will get a fair hearing from Ofcom,” Mr Hunt wrote. “I am privately concerned about this because News Corp are very litigious and we could end up in the wrong place in terms of media policy. Essentially, what James Murdoch wants to do is repeat what his father did with the move to Wapping [where he broke union strangle-holds on newspapers to introduce new technology] and create the world’s first multi-platform operator, available from paper to web to TV to iPhone to iPad. Isn’t this what all media companies have to do ultimately? And, if so, we must be very careful that any attempt to block it is done on plurality grounds and not as a result of lobbying by competitors.” Then Mr Hunt appeared to throw his backing behind the controversial £8 billion bid, writing, “The UK has the chance to lead the way on this as we did in the 80s with the Wapping move, but if we block it, our media sector will suffer for years. In the end, I am sure, sensible controls can be put into any merger to ensure plurality, but I think it would be totally wrong to cave into the [BBC and Guardian] line that this represents a substantial change of control given that we all know Sky is controlled by News Corp now anyway.” News Corp owns 39 per cent of Sky. The company abandoned the full-takeover bid last year following public outrage over the phone-hacking scandal at its now-defunct paper, the News of the World. Mr Hunt was meant to be impartially overseeing the takeover proposal. He had a ‘quasi-judicial’ role to be objective, which Lord Justice Leveson last night said meant not speaking to the parties in any way that was not “open and transparent to everyone”. Mr Hunt’s job is under threat following earlier revelations that a lobbyist for News Corporation, Fred Michel, wrote 164 pages of emails to James Murdoch that seemed to suggest Mr Hunt was secretly on-side with the £8 billion Murdoch bid. Last night the inquiry revealed that Mr Michel had also exchanged 191 phone calls, 158 emails and more than 1000 texts with Mr Hunt’s office during the process. But Mr Michel, head of communications for News Corp in the UK, said he could not assess whether Mr Hunt had been supportive of the bid. He said he had not met Mr Hunt during that time but had exchanged several text messages with him. “Nothing inappropriate never [sic] took place,” he said. One message he sent in March 2010 congratulated Mr Hunt on his performance in the House of Commons that day. Mr Hunt sent the French-born Mr Michel a text reply saying, “Merci! Large drink tonight.” In one email Mr Michel wrote that Mr Hunt believed a new NewsCorp proposal over the bid would mean “it’s almost game over for the opposition” and that “he said we would get there in the end and he shared our objectives”. The minister did not want to the process to go to the Competition Commission as “Jeremy Hunt believes this would kill the deal”, Mr Michel wrote in another email. But Mr Hunt also wanted to “build some political cover with the process”, an email said: “He wants us to take the heat with him in the next two weeks.” Labour has accused the minister of being a “cheerleader” for the Murdochs’ now-abandoned bid and called for Mr Hunt to resign over the affair but Mr Cameron is standing by him. Lawyer Robert Jay, QC, asked Mr Michel about how he had received preview information from Mr Hunt’s special adviser, Adam Smith, on a statement on the BSkyB bid the minister was to make to Parliament the next day. Mr Michel said he was surprised that Mr Smith sent him information about the statement before it was made to parliament. Mr Michel had written to Mr Murdoch of this, “Managed to get some information on the plans for tomorrow although absolutely illegal”. Asked what he meant by “absolutely illegal”, Mr Michel told the inquiry, “it was a very bad joke which shouldn’t have been made. I think it was out of my surprise to get a briefing on the contents of the statement.” Mr Jay challenged Mr Michel on an email in which Mr Michel claimed that Mr Hunt and the Prime Minister’s office wanted guidance from News International on how they should position themselves over the phone-hacking scandal. Mr Jay said Mr Smith strongly denied asking for this. Mr Michel replied, “I can completely vouch for the fact that we discussed those issues with Adam.” But he said “‘guide’ might be too strong a word, probably, but there was an offer from me to brief the departments on the on-going issues of News International and it was something that was welcomed at the time”. Last month Mr Smith resigned over the email revelations. He said that in his many communications with Mr Michel he had acted without Mr Hunt’s authorization and he had allowed the impression to be created of too close a relationship between News Corp and the Department for Media. Questioned at the inquiry last night, Mr Smith said he had had a close working relationship with Mr Hunt. But he denied the minister was close to the Murdochs or their companies: “He did not have that much of a relationship with either of the Murdochs or the chief executive of News International… he was not close to News Corp.” He also denied that Mr Hunt had been a “cheerleader” for News Corp’s BSkyB bid. First published in The Age.