Bloomberg News

News Corp, BSkyB Advisers May Lose $90 Million on Deal Collapse

July 13, 2011

July 13 (Bloomberg) -- Advisers to News Corp. and British Sky Broadcasting Group Plc are set to lose about $90 million in fees after News Corp. abandoned its 7.8 billion-pound ($12.6 billion) bid for full ownership of the U.K. TV service.

Rupert Murdoch’s News Corp. withdrew the offer for BSkyB following allegations that one of its publications, U.K. tabloid News of the World, hacked into cell phones to get information.

JPMorgan Chase & Co. and Deutsche Bank AG, which are advising New York-based News Corp., may lose a total of $45 million and BSkyB advisers Morgan Stanley, UBS AG and Bank of America Corp. may lose an equal sum, according to estimates by New York-based research firm Freeman Consulting.

News Corp. pulled its offer for the 61 percent of the U.K. broadcaster that it didn’t already own after more than a year battling for regulatory approval. The announcement preceded by two hours a U.K. parliamentary vote, supported by Prime Minister David Cameron, calling on Murdoch to abandon the deal. U.K. lawmakers said News Corp. needs to do more to atone for the misdeeds at his newspapers.

Spokesmen for Morgan Stanley, Deutsche Bank, JPMorgan and Bank of America in London declined to comment. A spokesman for UBS declined to comment.

The phone-hacking scandal prompted Murdoch to close the 168-year-old News of the World and derailed the BSkyB takeover, which the government had indicated last month it would approve. It would have been the biggest media deal of the past 18 months, according to data compiled by Bloomberg.

BSkyB rose 13.5 pence to 705.5 pence in London trading. News Corp. Class A shares rose 67 cents, or 4.4 percent, to $16.02 as of 3:06 p.m. New York time in Nasdaq Stock Market trading. News Corp. dropped 15 percent through yesterday since July 5, the first trading day following reports that News of the World deleted messages from the voicemail of a murdered schoolgirl, prompting further allegations of illegal practices.

--With assistance from Ambereen Choudhury in London. Editors: Elizabeth Wollman, David Scheer

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.


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