An Inquiry into the Culture, Practices and Ethics of the Press
June 2010 – December 2010: The Rt Hon Dr Vince
June 2010 – December 2010: The Rt Hon Dr Vince
¶Cable MP and the Department for Business,
¶Innovation and Skills
¶Initial reaction 3.1 News of the bid broke early on 15 June 2010. The Press Association reported it in terms which
make clear the commercial sensitivity of the regulatory process and which are a reminder that this is an area in which a balance has to be struck between regulation and free operation of the market:35
"BSkyB said today that it had rebuffed an initial attempt by Rupert Murdoch's News Corp to take full control of the UK satellite broadcaster. The 700p-a-share approach for the 61% of BSkyB that NewCorp does not currently own values the FTSE 100 Index company at around £12 billion. BSkyB said the proposal significantly undervalued the business and called for an offer in excess of 800p a share, in part to compensate shareholders for the wait they would face while regulatory clearance was sought..." (emphasis added)
¶3.2 James Murdoch immediately requested and was granted a telephone call with Dr Cable.
In his evidence Dr Cable described himself as having been in listening mode during this conversation.36 He denied giving any indication of his views: "I gave no indication of my views on the bid one way or another".37 The short formal minute of the conversation made by his officials is consistent with this.38
¶3.3 Dr Cable's account was disputed by both James Murdoch and Mr Michel. In an internal email,
1310Mr Michel quoted Dr Cable as having said that: "there would not be policy issue in this case" and opined: "We should have recorded him!"39 James Murdoch addressed the issue in the course of answering a broader question about a supportive statement about the bid made by I Mr Hunt: "...this is one part of the government, saying: "Look, we don't see any issues here, we'll probably be – it's going to be fine", which is consistent with what Mr [sic] Cable had told me on the telephone".40
¶PART I | The Press and Politicians
¶3.4 It is not necessary to resolve this conflict in the evidence for two reasons. First, whether or
not Dr Cable expressed a provisional view, he later came to a very different conclusion and he did so on the basis of reasons which were both proper and well supported. Second, whatever else the remaining evidence about the bid shows, it certainly does not reveal any appearance of bias on the part of Dr Cable in favour of News Corp.
¶3.5 An internal BIS email suggests that in the conversation on 15 June 2010 Dr Cable had not
ruled out meeting James Murdoch. His subsequent decisions not to do so were to become a source of frustration to News Corp:41
"At the end of the call this week James suggested he and the SoS meet up at some point, SoS vaguely agreed. They now want a slot in the diary".
¶3.6 Initially, Dr Cable's officials considered that it would be unreasonable to refuse a meeting
although they contemplated that the Secretary of State would once more be in listening mode:42
"It seems reasonable to assume that since the phone call earlier this week, the two companies are closer to reaching a deal and that James Murdoch wants to update the SofS and, in the light of their experience in the ITV share acquisition case, would want an indication from the SofS as to whether he would use his powers of intervention. It therefore would perhaps seem unreasonable to refuse their request. The SofS should however, be in listening mode and I would suggest that he should follow the lines to take (background would remain the same) as provided in my e mail of late Tuesday evening. It might help if a CCP official could sit in." (emphasis added)
¶3.7 Dr Cable decided not to, and the efforts of Mr Michel to secure a meeting for his principal were rebuffed:43
"...Also I understand that Frederic Michel's office called my private secretary on a number of occasions to try to arrange a meeting but after considering advice I decided to decline any meeting".
¶3.8 Dr Cable explained why:44
"Well, the name Frederic Michel didn't register on my radar, but I was aware that there was a request to have a meeting, and I didn't wish to be disrespectful to Mr Murdoch. I do meet major investors. But in this case I thought there were compelling reasons not to meet him. First of all, there was a legal risk because the subject which he clearly wished to talk about was something couldn't talk about, that if I did meet
¶I him this might be perceived by other parties to be partial in his direction, and I would
1311therefore have to see them, and there were lots of them, so potentially very large numbers of meetings which, by definition, couldn't have any substance, and – but I think the key reason was I didn't actually think it was necessary, because they had an opportunity to, through Hogan Lovells, to put their opinions in writing, their submissions. They did so on several occasions."
¶Chapter 6 | The BSkyB Bid
¶3.9 Dr Cable had been invited to News Corp's summer party, due to be held the next day on 16
June 2010, and had been intending to attend that function. Mr Michel's email reporting the telephone conversation between James Murdoch and Dr Cable appears to record that at that stage Dr Cable was still intending to go to the function: "Cable said he was coming as planned tomorrow".45 In the result, because of the bid, Dr Cable decided that it would not be appropriate to attend and did not do so.46 Thus, from an early stage Dr Cable decided to avoid personal contact with News Corp either directly in connection with the bid or at all. It was open to him to decide whether to intervene on the basis of written submissions. He was not obliged to give Mr Murdoch an oral hearing. It was also prudent for the decision maker not to be seen to be socialising with one party to the bid whilst the decision was pending.
¶3.10 The first lines to take, worked up by officials for Dr Cable, wisely advised him not to rush to a
decision: "...recommendation is not to intervene at this stage, or at least until more is known and until the merger has been notified to the EC".47
¶3.11 Preliminary advice on the substantive decision followed shortly thereafter. Subject to
consideration of any arguments put forward to the contrary by interested parties, it recommended against intervention:48
"Our initial view is that there is no reason to make a public interest intervention in this proposed transaction since it appears to involve no change in practice to the extent to which people have access to a wide range of views and opinions. Nevertheless, interested parties may put forward a case for intervention and will need to consider carefully any arguments that may be put forward on the matter. Accordingly, in any public statements BIS makes on the matter, it is important to reserve the Secretary of State's position and not appear to have already reached a conclusive decision".
¶3.12 In coming to this view, officials had spoken about the proposed transaction with colleagues
at Ofcom, DCMS and the OFT. Both Ofcom and the OFT are recorded initially to have been unconcerned by the bid, contrary to their eventual positions. The officials at DCMS had properly identified that the intervention decision was not a matter for them:49
"We have spoken about the transaction with colleagues at Ofcom, DCMS and the OFT. Ofcom indicate that while the transaction may give Newscorp increased influence over BSkyB's output , they already treat Newscorp and BSkyB as one entity for the purposes of the media ownership rules provided under the Communications Act 2003. DCMS officials had no points to make relevant to the decision on whether or not an intervention might be appropriate – a decision that falls to be taken solely by the BIS Secretary of State. The OFT indicated they did not consider the transaction likely to raise substantive competition concerns." I Submissions to Dr Cable
¶3.13 There is no statutory duty to consult in relation to a decision on whether to intervene on public interest grounds and Dr Cable chose not formally to invite submissions or to meet
1312¶PART I | The Press and Politicians
interested parties (including News Corp as mentioned above). Nevertheless, he did inform people that it was in order to send him substantive submissions.50 Whether as a result of this or entirely of their own volition, many people and organisations sought to make their views on the question known to the Secretary of State. He did not initiate any exchange of those submissions which he did receive.51
¶3.14 The first such approach came on 23 June 2010 when Brendan Barber, General Secretary of
the TUC wrote to express "grave concerns" about the bid and sought a meeting to discuss the issue: "...I would welcome the opportunity for myself and colleagues representing workers in the media industry to meet with you to discuss this urgent matter further...".52
¶3.15 A response, which took some time to prepare and went through a number of drafts, was sent
on 2 August 2010. It explained the decision which the Secretary of State had to make, referred to the Guidance, and invited the TUC to submit written arguments on the matter.53 That approach was subsequently followed when responding to numerous others who intimated their opposition to the transaction but did not address the specific question which Dr Cable had to decide.
¶3.16 On 20 July 2010 Hogan Lovells, solicitors acting for News Corp, submitted an 8-page
document which it described as a preliminary briefing and which methodically argued against intervention.54 Their thinking chimed with that of BIS officials whose reaction is recorded in an internal email:55
"The Hogan Lovells analysis accords with our own assessment of the position – which is: (i) that the transaction appears to make no substantive difference to the state of plurality of persons with control of media enterprises since News Corp is already deemed to have the power to influence the output of BSkyB and (ii) that our published guidance on use of the power to intervene suggests this is not a case in which we would expect to use the power to intervene save in exceptional circumstances. We remain open to argument on the matter but there would need to be substantive information on which to base different conclusions about the case for a public interest intervention".
¶3.17 There followed a growing number of submissions against the bid, urging Dr Cable to intervene,
from media companies and others. On 30 July 2010, Enders Analysis (Enders) produced a 20- page submission, packed with statistics, which considered the UK TV and newspaper markets, and News Corp's strategy for growth (as seen by Enders), before identifying three specific plurality concerns which are set out in full below because the same or very similar points
¶I were made in many of the other submissions objecting to the bid:56
1313"First, products currently separately offered by BSkyB and News Corp titles may be combined in bundles, discounted or provided without charge. For instance, BSkyB
¶Chapter 6 | The BSkyB Bid
could bundle News International titles with monthly entertainment to its millions of customers in the UK. If this happens, long-held reader loyalty to titles such as The Mirror, The Daily Telegraph and even The Daily Mail could be severely tested. In other words, reader loyalty would be measured by a new and entirely different yardstick than previous competitor options, such as temporary price discounts or a new supplement. Strategic initiatives of this nature could lead to a much more rapid decline in competitor newspaper circulations than we have assumed, boosting News Corp's newspaper market share above 40% by 2014. Magazine publishers already know something about this: Sky distributes 7.4 million copies every month of its magazine to subscribers of its TV services, making Sky the largest circulation magazine in the UK based on ABC data. Second, the widespread availability of fast broadband is encouraging the rapid convergence of press and television. Today's newspaper websites contain increasing numbers of video clips and extended interviews. Once the News Corp purchase has been completed, stories from Sky News (especially video) will presumably be carried more and more frequently on News Corp websites. Links to newspaper stories could appear at the bottom of the Sky News screen. Progressively, News International papers and BSkyB channels, particularly Sky News, may merge into one stream of fact and opinion. If this occurred, plurality would decline, even if the combined organisation continued to maintain newsrooms that are nominally separate. Third, the loss of independent BSkyB shareholders will allow News Corp greater opportunity to influence tacitly or otherwise, the editorial coverage of Sky News and other BSkyB channels. The 2006 investigation by the regulators of the BSkyB purchase of ITV shares found no evidence of proprietor intervention in Sky News under its current shareholding structure, but this could change under full ownership. Today, the presence of strong independent directors of the company, many of whom have substantial external reputations, helps protect independence and diversity of what appears on screen, particularly on news programmes."
¶3.18 The Enders submissions arrived on 2 August 2010,57 on the same day as an internal email
records that Dr Cable was questioning News Corp's submissions (and by implication the views of his own officials) as well as expressing an interest in what others thought about the proposed transaction. The document marks the start of a gradual turning of the tide against News Corp on the question of intervention:58
"The SoS is of the view that News Corporation's lawyers can hardly be considered an independent source of advice. The SoS has read strongly argued views to the contrary. He is somewhat concerned to read that "OFT does not expect the merger to give rise to competition concerns". Does this not suggest that they have prejudged the issue? I Or have they already carried out an evaluation?" The SoS has also queried what other representations have been received, Have [sic] other media groups written letters? The BBC? Are we expecting representations from these and others?"
¶3.19 In his evidence to the Inquiry, Dr Cable stated:59
1314¶PART I | The Press and Politicians
"...In the light of the more substantive representations which began to come in, I began to believe that there were genuine substantive concerns about the merger and that the case for intervention should be explored very thoroughly before reaching conclusions on the matter."
¶3.20 The internal response of Dr Cable's officials was to stick to their original view, and point to
their experience of the plurality test in the only previous case in which the test had been applied:60
"...Our own analysis of these questions leads to the conclusion that intervention appears unlikely to be appropriate in this case – as briefly set out in my original briefing note submitted on 25 June. The Hogan Lovells submission on behalf of Newscorp draws much the same conclusions for the same reasons. This is not surprising. We all have direct experience of using the powers to intervene in media mergers having done so in respect of BSkyB's acquisition of a 17.9% stake in ITV plc and this heavily contested case examined very thoroughly before the courts the limits of the Secretary of State's powers. ... ...On an initial reading, however [the Enders submission] appears unlikely to raise points that could lead us to reach different conclusions about the merits of an intervention by the SofS in either of these cases."
¶3.21 Guardian Media Group (GMG) also wrote in opposition to the bid on 30 July 2010.61 British
Telecom (BT) followed on 13 August 2010 with a nine page submission62 and Trinity Mirror on 16 August 2010.63 Replies were sent to each of these organisations and to Enders. GMG, which had written only a short letter, was referred to the Guidance and invited to submit arguments which took the Guidance into account. The other parties' submissions were acknowledged and they were advised also to make submissions to the EU Commission's DG Competition because many of the points which they had raised appeared to BIS to relate to potential competition impacts.64
¶3.22 On 25 August 2010 Dr Cable met Brendan Barber of the TUC at a regular quarterly meeting.
The minutes record that Mr Barber raised the question of the bid but Dr Cable's evidence, which is consistent with the minutes, confirms that the Secretary of State was careful not to give Mr Barber an oral hearing (which would have been inconsistent with his approach towards other interested parties) and simply responded by reiterating the request for written submissions. The minutes state:65
¶"BB said that the reported Newscorp acquisition of BSkyB was a serious issue for media I unions. BB said that there were practical, industrial issues on the media plurality issue
1315which the unions were concerned about. SoS said that there was a careful process to be followed, and that he had no pre-conceived judgments, but he said he would be willing to hear any genuine representation and consider the evidence."
¶Chapter 6 | The BSkyB Bid and Mr Cable's evidence was:66
"...I have regular quarterly meetings with the TUC and the matter was raised at my meeting with them on 25 August 2010 but I declined to discuss the matter further..."
¶3.23 Officials next worked up a submission dated 3 September 2010 with advice for Dr Cable who,
officials believed, was keen both fully to understand the situation and to know: "What would a representation which does provide valid grounds for him to intervene look like?".67 They did not find the arguments straightforward: "The arguments are complex and we recommend a further discussion before you make a decision".68 It was at this point that the low statutory threshold for intervention was expressly drawn to Dr Cable's attention:69
"In summary, we believe that the substantive arguments as to why this merger might be deemed to result in insufficient plurality of persons with control of media enterprises are not strong. Nevertheless, the legislation provides a deliberately low legal threshold for taking a decision to issue an intervention notice. You need only believe it is or may be the case that the specified public interest consideration is relevant to a consideration of the merger. The prospect of legal challenge arising at this initial intervention stage appears low since the process involved is relatively short and would not involve significant burdens on the parties to the merger. However, issuing an intervention notice initiates a formal statutory process and places you in the position of taking formal decisions in accordance with the requirements of the Enterprise Act 2002. The nest stage in that process would be for you to decide whether or not to refer the merger on public interest grounds to the Competition Commission. At this second stage, the evidential threshold is higher and the prospects of legal challenge much greater. The evidence you would have on which to base that decision may well be substantively the same as the evidence you have already received in submissions from the parties to the merger and from interested third parties."
¶Counsel's advice 3.24 Counsel with relevant expertise was instructed on 9 September 2010 and she advised in
conference on 16 September 2010. Legal privilege in that advice was very helpfully waived and the Inquiry has had the benefit of sight of the instructions to counsel, notes of the conference and subsequent emails recording further advice given subsequently as events unfolded.70 Counsel took a very different view to that initially taken by officials within BIS. Her advice marked a turning point insofar as advice given to Dr Cable is concerned, pointing very clearly in favour of intervention.
¶3.25 Counsel advised that it was entirely open to the Secretary of State to conclude that it is, or may I
1316be the case that media plurality is, or may be, relevant to the proposed acquisition. It would be difficult to argue, in the face of submissions from Enders and others, that media plurality could not be a consideration. The fact that the European Commission would investigate any potential market distortion would not be a good enough reason for not intervening, if it appeared there may be concerns about media plurality. Deciding not to intervene would be a conclusive determination of the question of media plurality and would carry a greater risk
¶PART I | The Press and Politicians
of successful challenge than a decision to intervene. So far as the Guidance was concerned, this merger may be regarded as exceptional since it involved a large number of news outlets coming under complete common control (because Sky News provided news to Channel 5 and local radio) and was analogous to the example given in paragraph 8.8 of the Guidance. As for the prospects of challenge, News Corp would be unlikely to challenge a decision to intervene and, if it did, then it would be more likely than not to be unsuccessful. On the other hand, the chances of a decision not to intervene being successfully challenged were higher than the chances of the opposite decision being successfully challenged.71
¶Further submissions to Dr Cable
¶3.26 Meanwhile, submissions advocating intervention continued to arrive. BT wrote again on 16
September 2010. The author of that letter, Ian Livingstone, CEO of BT Group, referred to having spoken briefly to Dr Cable about the bid: "We spoke briefly about this when we met recently and I thought it would be helpful if we clarified a few points again as you still be considering the matter"72 before summarising and augmenting BT's previous submissions. The BBC expressed its concerns by letter on 20 September 2010.73 It is clear that it was not possible for Dr Cable entirely to insulate himself from contact with interested parties as this reference to meeting Mr Livingstone and the meeting with the TUC referred to above demonstrate. However, it is hard to see how such encounters could have been avoided. It is all but inevitable that a person in Dr Cable's position (and later Mr Hunt's) would come across interested parties during the course of their other duties. That is the nature of the environment in which this quasi-judicial decision making was being conducted.
¶3.27 The submissions received by BIS, arguing in favour of intervention, were not copied to News
Corp by BIS. Nor was News Corp given any formal written indication by BIS as to the gist of the case against it. News Corp did obtain a copy of the Enders submission because it had been posted on the internet. On 20 September 2010, as is evidenced by an email of that date, Hogan Lovells, on News Corp's behalf, intimated to BIS that it wished to respond to the Enders submission. They did so in writing in a very detailed letter dated 29 September 2010,74 arguing that Enders' submission misunderstood and presented a flawed and misleading view of the relevant legal and regulatory framework for the assessment of media public interest considerations; relied on unsupported and speculative assertions concerning the effects of the proposed transaction; and was founded on selective and in certain instances, misleading public interest considerations in relation to the proposed transaction.
¶3.28 On the day on which these further submissions arrived Dr Cable, with the assistance of his officials, was in fact preparing lines to take on News Corp predicated on a decision to I intervene:75
1317"As discussed, the SoS has amended the lines to take on Newscorp. It now reads: I have received various representations on this issue from a variety of [media] groups. It is my statutory responsibility to ensure that issues of media plurality are carefully considered in takeovers. Given the [serious] concerns [about plurality] raised with me in this case, I have asked the independent experts at Ofcom to investigate the matter
¶Chapter 6 | The BSkyB Bid
and report back to me. [I will not comment any further on this case until I hear back from Ofcom]..."
¶3.29 The arrival of News Corp's further submissions prompted BIS to take further advice from
counsel and to prepare a submission for the Secretary of State to consider with the further submissions. Counsel remained of the view that the grounds to challenge an intervention were not particularly strong given the significant discretion available to the Secretary of State in deciding whether to intervene, and the non-determinative nature of that decision.76
¶3.30 Officials continued to make ready for a decision to intervene: a draft statement to Parliament
was prepared on 8 October 2010.77 On the same day, an opinion from solicitors Slaughter & May, supporting intervention, was submitted by an alliance of communications and media companies ("the Alliance") comprising: the BBC, BT, GMG, ANL, Trinity Mirror and Northcliffe Media.78 Four of these companies had previously made individual submissions in opposition to the bid.
¶3.31 A draft copy of the same advice was later submitted by the Financial Times (FT) on 14 October
¶2010 together with a letter supporting intervention.79
¶3.32 As with the Enders submission, News Corp was not provided with a copy of, or informed of
the gist of the Slaughter & May advice by BIS. However, it obtained a copy of the draft advice and sent detailed written submissions in rebuttal to BIS on 27 October 2010.80 They were put to counsel but they did not cause her to change her advice:81
"Counsel confirmed on Friday that nothing in the latest submission from Hogan Lovells caused her to change her previous assessment of the legal case for intervention and risk of challenge – the existence of uncertainty about the impact on the public interest does not preclude intervention to require a more substantive initial assessment of such impacts".
¶3.33 The campaigning group 38 Degrees delivered a petition with 18,956 signatories on 14 October
2010.82 Officials considered that Dr Cable ought not to meet the group so as to "preserve his impartiality in considering the merits of the case"83 and Dr Cable did not do so.
¶3.34 Support for News Corp's position was expressed by Capital Research and Management, an
American based investment management organisation which had client mutual funds holding an approximately 5% stake in BSkyB.84 Further support, in the form of a report by Berenberg Bank, appears to have arrived after the decision had been taken but before it was announced and was forwarded to Ofcom.85
¶I
1318¶PART I | The Press and Politicians
¶The decision to intervene
¶3.35 Dr Cable decided to intervene. His decision was made public on the morning of 4 November
- News Corp was informed the evening before the announcement of the timing but not the substance of the decision.86 The timing of the decision followed formal notification of the proposed transaction to the European competition authorities by the parties to the deal. The Secretary of State explained his decision in these terms:87
"Having regard to the Guidance, my view was that as the merger involved a situation where several significant sources of news would be coming under common control the situation was at least akin to examples given in the Guidance as to when such exceptional circumstances might arise. As such my intervention in this case represented a reasonable and appropriate use of my power to intervene. I took a decision to intervene which was on the basis of my belief that there was or may have been a public interest consideration specified in Section 58(2C)(a) of the Enterprise Act relevant to the consideration of the merger, namely to ensure that there is sufficient plurality of persons with control of media enterprises in the UK. This decision was one for me, and me alone, to take on the information before me. The decision I took was that it was appropriate to require Ofcom to undertake an initial investigation to enable the substantive arguments to be explored more fully."
¶3.36 Dr Cable did not seek to hide his concern about the political influence of the Murdochs,
although he maintained that he recognised at all times the legal parameters of the decision he was taking. He continued:
"Having considered all the evidence and submissions, it seemed clear to me that the proposed merger did raise genuine concerns affecting the public interest and that these should be properly considered. In my opinion as a politician, I also believed that the Murdochs' political influence exercised through their newspapers had become disproportionate. The accusation that leading political figures in the Conservative Party and the Labour Party had offered disproportionate access to the Murdoch's [sic] was widely made, as was the perception that both parties had shown excessive deference to their views (as expressed through News International newspapers). But in both respects I recognised that I could only act within the constraints of the legislation as described above."
¶3.37 The effect of the EIN which Dr Cable issued on 4 November 2010 was to require both the
OFT and OFCOM separately to investigate the proposed transaction and report to him by 31 December 2010.88 The OFT's remit was to advise on considerations relevant to making a
¶I reference to the Competition Commission on competition grounds and to decide whether it
1319believed that a European relevant merger situation would be created if the transaction was executed. It also had a discretion to advise and make recommendations on the sufficiency of plurality of persons with control of media enterprises (because that public interest consideration was identified as relevant in the EIN) and to summarise any representations about the case which it received and which related to that issue.89 Ofcom had no discretion and was required to report with advice and recommendations on the effect of the media plurality consideration identified in the EIN on the case, as well as to summarise any representations
¶Chapter 6 | The BSkyB Bid
about the case which it received relating to that media plurality issue.90 In the result OFT and Ofcom reported to Mr Hunt and not to Dr Cable because responsibility for the bid was transferred whilst they were both investigating.
¶3.38 Hogan Lovells engaged BIS in correspondence about the reasoning for the decision but, in
line with counsel's earlier prediction, News Corp did not go so far as to seek judicial review of the decision to intervene.91
¶3.39 This process, whilst entirely proper, was confused by the fact that people made submissions
at different times, and there was a lack of transparency arising from the fact that the representations made were not published by BIS (although in some cases they were published by those making them). Neither was it necessary for Mr Cable to explain the reason for his decision once he had reached one. A more formal, streamlined process in the future with more transparency both about the arguments being made and the reasons for the decision, might help to avoid any potential concerns about bias or appearance of bias.
¶Media lobbying behind the scenes 3.40 Of particular interest to the Inquiry was the behind the scenes lobbying activity related to
the bid. The interactions between those acting on behalf of media companies and politicians concerning this multi billion pound proposed media transaction provide a good example of how easily the relationship can become unhealthy. Under this subheading, the Report seeks, in relation to the bid whilst it was Dr Cable's responsibility, to examine who was lobbying behind the scenes, why they were doing it behind the scenes, whom they were targeting, what were they seeking, how were they going about achieving their aims, and with what results.
¶3.41 The evidence makes abundantly clear that News Corp mounted a determined lobbying
campaign in support of its bid from the outset which went well beyond the written submissions which it made to Dr Cable. As a matter of generality, James Murdoch explained:92
"I think in any situation, any business is going to – yes, is going to try to advocate the merits of its case, be it an investment case or a regulatory case, to a wide audience of policy-makers who may or may not be in a position to have some input into it".
¶3.42 The day to day lobbying effort was led by Mr Michel. In relation to the duties of public affairs executives James Murdoch was clear that:93
"...Mr Michel's job was to engage with special advisers and at a political level with Westminster, to put it broadly. That is what a public affairs executive does...." I
¶3.43 Mr Michel did not act alone. James Murdoch was also speaking to politicians about the bid,
1320when the opportunity presented itself, and the evidence showed the interaction of others from time to time. Internally, a number of senior people are seen copied into Mr Michel's emails reporting back his contacts with politicians, SpAds and officials.
¶PART I | The Press and Politicians
¶3.44 In addition to his single conversation with Dr Cable, James Murdoch spoke to a number of
senior politicians about the bid. The first of these was Mr Hunt to whom he spoke on 15 June 2010 (the day on which the bid was launched and James Murdoch also spoke to Dr Cable). When asked whether the bid was discussed, James Murdoch could not remember but he realistically thought that it would have been:94
"I don't. I don't remember. I think – but I mean, it was in those days around the announcement of the bid, so I'd be surprised if it weren't [discussed], and I would have taken the same position that I took publicly and that we took with anyone who would listen."
¶3.45 Mr Hunt confirmed that the bid had been discussed. Both at that time and in his evidence
he did not hide his opinions which were broadly sympathetic to the bid. He was, of course, entitled to hold an opinion about the bid and it was entirely unsurprising that the Secretary of State for Culture, Media and Sport should have a view about a proposed transaction of this scale in the media sector:95
"I have always been open about the fact that I was broadly sympathetic to the proposed acquisition prior to taking responsibility for it. I expressed those views when James Murdoch called me to tell me about the planned acquisition in June 2010."
¶3.46 Throughout the bid, Mr Michel maintained a dialogue with DCMS about the proposed
transaction. This communication was conducted principally, but not exclusively, through one of Mr Hunt's special advisers, Adam Smith. That contact (and contact with BIS and others) is primarily recorded in Mr Michel's emails, but also in text messages; and it is further evidenced by telephone records provided to the Inquiry. At the outset of a consideration of his evidence, it is necessary to make two important observations about Mr Michel's emails.
¶3.47 First, Mr Michel's emails reporting this contact to his colleagues are very often worded as
if he has had direct conversations with Mr Hunt. As was made clear when the emails were disclosed to the Inquiry, and as was confirmed by Mr Michel in a statement exhibiting a detailed supporting analysis, that was generally not the case. In particular, he maintains that he had no conversation with Mr Hunt between 24 December 2010 and the end of July 2011 relating to the BSkyB bid, beyond two formal meetings which he attended as part of the News Corp team (and which are considered later in this section of the Report). Other contact during this period was limited to seeing him very briefly before a dinner and to some personal text messages (which are also considered later in this section of the Report). Mr Michel wrote as he did as a form of shorthand:96
¶I
1321"At no point between 24 December 2010 and the end of July 2011 did I have any direct conversation with Jeremy Hunt relating to the BSkyB proposal beyond the two formal meetings I attended with the News Corp team referred to above. Given the absences of direct interaction with Jeremy Hunt which I have just described, it may appear surprising that within the emails in Exhibit KRM18 there are emails after 24 December 2010 the language of which suggests that I had frequent contact
¶Chapter 6 | The BSkyB Bid
with Jeremy Hunt on the BSkyB proposal. In the emails I use language such as "spoke to Hunt", "had a call with JH", "JH said", "Jeremy said" and other variations. I often use the wording "JH confidential" as a heading for emails. I want to make absolutely clear that such phrases are no more than shorthand for what I was told by someone within Jeremy Hunt's office, almost invariably his special adviser Adam Smith. For the purposes of these emails, I did not distinguish between Jeremy Hunt's advisers and him personally. His advisers were there to assist and advise Jeremy Hunt and it was my understanding that when they told me something, it was always on behalf of the Minister and after having conferred with him. It was on this basis that I relayed the information to my colleagues in the emails, using this form of shorthand." (emphasis added)
¶3.48 Second, the terms in which Mr Michel relayed information were often not as accurate or
precise as they might have been, and he did not always clearly distinguish between what he had been told and his own thoughts. A number of witnesses commented upon this, or took issue with specific examples, particularly Mr Smith: "...I do not always recognise them to be an accurate reflection of conversations which I had with Mr Michel".97 In some instances there was clear exaggeration. Further, Mr Michel is often relating the thoughts of one person about what another is thinking or likely to do, in circumstances where it might either be speculation or simply wrong. For this reason, Mr Michel's emails have been treated with real caution. Even so, they remain of very considerable evidential significance by providing an insight into News Corp's media lobbying effort.
¶3.49 Mr Michel himself explained: "...Sometimes I would add some elements that can be helpful for the team".98
¶3.50 Rupert Murdoch's evidence was:99
"Q. Were you not surprised by the degree of apparent closeness between Mr Michel and Mr Hunt's office? A. No, and I don't want to say anything against Mr Michel, but I think there could have been a little bit of exaggeration there".
¶3.51 Dr Cable, when dealing with one of Mr Michel's early emails said:100
"Would you just allow me to make a general comment on this reference to people close to me, because there are continued references to so-called advisers, people who are close to me. I have no idea who these people are. Nobody was authorised to speak on my behalf, and there are whole sets of comments like this which I don't recognise, so – just so I don't have to repeat that in response to every question". I
¶3.52 On the day that the bid was launched, Mr Michel wrote in an email that he had "Had a call
1322from Hunt's adviser" who "Said there shouldn't be media plurality issue and believed the UK Government would be supportive throughout the process [despite what the Standard for
¶PART I | The Press and Politicians
example is suggesting this evening]."101 Mr Smith did not deny that a conversation took place but he did deny saying that the UK Government would be supportive throughout the process and took issue with other parts of the email.
¶3.53 A second email stated that "Jeremy just called", and recorded that in an interview for the FT
Mr Hunt had said that the bid was: "matter for competition authorities but he didn't see any problems".102 Mr Hunt's actual words were: "It does seem to me that News Corp do control Sky already. So it isn't clear to me that in terms of media plurality there is a substantive change, but I don't want to second guess what regulators might decide".103 The impact of this public comment had later to be taken into account by the Prime Minister before deciding to transfer the decision to Mr Hunt.
¶3.54 The above contacts were the start of a pattern of behind the scenes lobbying extending far
wider than the actual decision maker, or even his department, but also to DCMS, no doubt because of its media portfolio and, in due course, to a number of others across Government and beyond.
¶3.55 At this early stage of the bid, it is contact with BIS that was the primary objective of Mr
Michel's efforts. By 23 June 2010 Mr Michel was following up James Murdoch's telephone call of 15 June 2010 to Dr Cable and working on procuring a meeting between the two. As James Murdoch emphasised in his evidence, it was a face-to-face meeting at which to put his case that he really wanted: "...all we wanted to do was to be able to sit down in a proper way ...Please sit us down and let us make our case".104 This must have been a priority for Mr Michel but he received a disappointing response from BIS, in keeping with Dr Cable's decision not to meet the parties, which he reported by email to James Murdoch in these terms:105
"Vince has been advised by his team it would be better to meet with you once things have settled down on the Sky process in order to avoid any media questions on the purpose / content of the meeting. Vince is keen to meet for a catch-up as you both discussed on the phone".
¶3.56 The email is not to be read as meaning that Mr Michel had direct contact with Dr Cable, in
view of the shorthand that the former was prone to use. It may be that the reference to meeting for a catch-up as discussed on the phone relates to the conversation between Dr Cable and James Murdoch on 15 June 2010, in which a BIS official had understood Dr Cable to have "vaguely agreed" to meet James Murdoch.106
¶3.57 The lobbyist did not have to report to James Murdoch a meeting with Mr Hunt on 28 June
¶2010 because Mr Michel, James Murdoch, together with Matthew Anderson of News Corp, I were all present. For his part, Mr Hunt was not accompanied by officials and the meeting was
1323not minuted, although he thought that the bid would have been discussed. He explained that it was one of a number of such meetings that he held with industry leaders during the early days of his tenure at DCMS:107
¶Chapter 6 | The BSkyB Bid
"A. Yes. I was told by my officials that it was entirely proper to have meetings where there were officials present who took minutes, and meetings where there weren't officials present and minutes weren't taken and it was entirely my discretion and I had that meeting with Mr Murdoch. I also had meetings with other officials, with the chairman of the BBC Trust, the head of ITV and a number of other people when I'd just become Secretary of State. Q. Do you believe that the BSkyB bid was discussed on that occasion? A. I would be very surprised if it wasn't discussed, because obviously it would have been top of Mr Murdoch's mind. I don't remember any particular discussions..."
¶3.58 By 28 July 2010, Mr Michel was reporting contact with "people very close to VC" asserting that:108
"-he is keen to be seen as the most pro-competition SoS and as we know he is very much anti-regulation -on our particular issue, he strongly believes the deal doesn't change the market situation or would have any impact on media plurality".
¶3.59 Whether those views really were the views of Dr Cable about the bid at the time is unlikely,
Dr Cable denied that they were.109 The views recorded are consistent however with the views of at least some of the officials within the Department at that time and with the advice that Dr Cable was receiving.
¶3.60 When the journalist Robert Peston asserted on 15 September 2010 that Dr Cable was likely
to issue an intervention notice, Mr Michel turned to DCMS to try and check the position. He texted Mr Hunt directly, who replied that he did not know anything. Mr Michel then reported that reply to colleagues in his idiosyncratic shorthand and in terms which went beyond those of the text which he had received: "Jeremy Hunt is not aware and thinks it's not credible at all. He is checking now".110 He must have thought that there was a least a chance of obtaining some confidential information about the bid this way, although there is no evidence that he did in fact do so.
¶3.61 Mr Michel's emails to his News Corp colleagues indicate that he began to try a new tack
soon afterwards by engaging key Liberal Democrat politicians. On 20 September 2010 he reported:111
"Had chat with Don Foster; DCMS spokesman for Libdems this morning. Very relaxed about the bid can't see plurality review taking place".
¶3.62 A week later Mr Michel had "Talked to Vince's main economic adviser, who sits in the Lords,
1324I over the week-end. He is leading on this for him." The peer had been reassuring (although by that time Dr Cable was in fact well on his way to deciding against NewsCorp): "I was told there is absolutely no reason to believe he would want a referral". Mr Michel was planning on keeping lines of communication open and sharing News Corp's arguments.112 The peer was
¶PART I | The Press and Politicians
probably Lord Oakeshott.113 Dr Cable was clear in evidence that in fact no one was leading for him. Whatever Lord Oakeshott actually said, it must have been in a personal capacity.
¶3.63 That is not to say that Dr Cable had had no contact with Lord Oakeshott. He explained how he
had spoken to Lord Oakeshott and a number of Liberal Democrats including Don Foster, who also features in Mr Michel's emails. Dr Cable emphasised that he only ever sought background and context from these colleagues and that he did not seek their views on the actual decision that he had to make:114
"Well, because I just wanted background understanding of the legislation and how it had originated. I had no background in media policy... I wasn't seeking their opinion on whether the merger was good or bad or whether I should intervene, but I did think it was useful to have a background understanding of the kind of questions you have just been asking me."
¶3.64 On 8 October 2010 Mr Michel reported seeing "... an adviser to Cable's team on business
issues" and relayed details in a lengthy email. Whoever this was gave Mr Michel the impression that there was a strong political influence playing on the pending intervention decision:115
"-at the moment, they are assuming Vince will refer because of the political pressure, the heavy media debate and the need for him to be seen as bringing scrutiny to a Murdoch transaction. -there is real unease in Libdem ranks over Coulson and the relationship to NI. Simon Hughes, deputy leader, is on a mission to make this an NI issue. The more it is linked to NI/NoW, the more it will stay political and toxic..."
¶3.65 The assumption quoted above turned out to be correct as to the result but is not as to the
reasons for it. Significantly though, it fuelled a growing belief on the part of Mr Michel that the wider political agenda was important and that advantage might be had if News Corp was to assist Dr Cable politically. The conversation also gave rise to renewed tactical thinking as to the best way to refine the lobbying effort. As Mr Michel recorded later in his email report:116
"-the adviser was very clear that if we try to aggressively push Cable, it will have a negative impact. But changing the narrative in the main media would help him politically a lot and help him inside the Cabinet. -advised to brief all the key lib-dems in coming weeks and go through the impact of the transaction is the key since it was made clear that the media agenda has had a very negative influence on the decision-making process
¶I -Many people around Cable are from the left or Labour and are briefing against us.
1325We need to engage with them behind the scenes even more. -Its the right timing as Parliament is back Monday.
¶Chapter 6 | The BSkyB Bid
NB: the Coulson/NI issues are agitating Cable's political base in a major way and there is absolutely no upside in trying to use NI in any lobbying. I am seeing the Chief Exec of the LibDem Tuesday on it. -regarding items we could help Cable with: we should try to help him make his pro business arguments, for example supporting his campaign to bring flexibility to migration cap and work with his team (I can get the people in the City who are helping him to come see us). Cable needs help in working with the City and we can have a two-way beneficial conversation with him." (emphasis added)
¶3.66 Political and media considerations were irrelevant to the decision which fell to be taken by
a specific minister in accordance with a test prescribed by statute. But News Corp clearly believed that Dr Cable might have been capable of being influenced by these extraneous factors and Mr Michel was beginning to contemplate how the company's corporate muscle might be deployed in order to try and influence the decision by helping Dr Cable politically. Dr Cable was clear that in fact he maintained his focus on the correct test.117 Had he been influenced as intended, then the proper exercise of the media plurality test would have been vitiated by irrelevant considerations.
¶3.67 In the meantime, Mr Michel and Rebekah Brooks had met Mr Hunt and Mr Smith at the
Conservative Party Conference on 5 October 2010. Mr Michel reported it to James Murdoch as: "...a very useful meeting with Jeremy Hunt today on the bid ...".118 Mr Hunt recalled how: "...I think they expressed some concern that they weren't getting a sympathetic hearing from Vince Cable, but not much more than that" and thought that he: "...would have said that my own view broadly speaking was that I didn't think there was a plurality issue, so I would have probably expressed some surprise that Vince Cable may have thought there was more of a problem".119 The opportunity was plainly used to lobby Mr Hunt in the hope that it might have led somehow to influencing Dr Cable.
¶3.68 Mr Michel followed up the encounter by sending Mr Smith information about the bid for
Mr Hunt.120 The provision of information which News Corp thought relevant to the bid to Mr Smith, for Mr Hunt, was to become a feature of their relationship. On this occasion the material was passed on to Mr Hunt and his reaction to it communicated back to Mr Michel by email: "Jeremys [sic] response to this – "persuasive"".121 The effect was not a profound change of mind. Mr Hunt was not hostile to the bid. But Mr Michel clearly thought it important to keep Mr Hunt abreast of the issue and on his radar.
¶3.69 On 12 October 2010, Mr Michel again spoke to "Vince's main adviser" and reported the
1326conversation back to colleagues by email. The email set out advice to target Lord Oakeshott and how to go about it. There was fresh mention that the referral decision would be a political I one and advice to keep briefing certain politicians:122
¶PART I | The Press and Politicians
"-he had one strong advice (as mentioned previously): the most influential person for Vince now is Lord Oashekott [sic], who is a difficult character and hates lobbying (and doesn't like our empire either ...) and who Vince talks to more than 10 times / day. It was suggested that we should try a very soft approach with him; get him meet with James Harding to get his views on some of BIS key items, like migration cap, and get me to pop in at some stage to give him an update on the current battle we face and inform his views. It would be a much better setting than a direct lobbying conversation. Do we think it's ok? -the referral decision will be a political one, especially if tuitions [sic] fees debate gets nasty in Vince's party and he need something to reassure his base ... -he also recommended to keep briefing senior lib-dems and key Cabinet members as we have started to do, to push things with Vince".
¶3.70 Dr Cable confirmed that he consulted Lord Oakeshott on other issues but not about the bid:
"...I consulted him on other issues, banking for example, but certainly not on this issue" as "... one of several people I rely on for general advice". He also denied speaking to Lord Oakeshott ten times a day or that wider political considerations were relevant to the intervention decision.123 But the perception as relayed by Mr Michel continued to portray the decision as political and, consequently, it was regarded therefore as one which might be influenced by wider political considerations.
¶3.71 Mr Michel took forward the effort to identify key Liberal Democrats when, on 18 October 2010,
he reported back on a meeting with Lord Clement-Jones, the Liberal Democrat spokesman in the House of Lords for culture, media and sport, explaining which Liberal Democrats he planned to target next, plainly in the belief that they were people to whom Dr Cable might talk to about the bid:124
"...His party is very keen to look at this as a political decision. ... We had a good chat re-key [sic] influencers around Cable. He has a little set of people around him he will call to ask for opinion and many Lib-Dem, Labour MPs will be writing to him to apply further pressure. ... It won't do any harm to explain our case to selected individuals who Cable is likely to call: Lord Newby – I will meet
¶I Lord Oakeshot- said he would be VERY receptive to a message from Patience on this:
Matthew can discuss asap? Lord Razzal – I will meet Chairman of Business Committee, Adrian Bailey – will meet" (emphasis added).
¶3.72 Dr Cable did not recall any Liberal Democrat MPs writing to him about the bid and told the
¶Inquiry for the purposes of the intervention the only "little set of people" around him were his
1327¶Chapter 6 | The BSkyB Bid
officials and lawyers. He did confirm though that the modus operandi revealed in the email was an example of the kind of commercial lobbying which happens a lot:125
"Yes. I mean lots of this happened, and one just has to learn to recognise it for what it is. But yes, I –and part of my role as being Secretary of State is to be open to people with opinions, and to engage with them. ...I suppose Mr Michel was an example of a lobbyist at work. I'm not making judgments about him and how he operated, but that is commercial lobbying indeed".
¶3.73 Mr Michel moved next from the strategy of targeting politicians who it was thought might
be contacted by Dr Cable to a more direct, proactive and specific approach. Two politicians emerged whom Mr Michel hoped would actively contact Dr Cable to impress upon him the economic benefits of the bid should it succeed. On 1 November 2010 he reported:126
"Mission accomplished. -Libdem MP, former Sky employee, with major Sky customer centres in his constituency and around, will contact Vince Cable to ask him to bear in mind the economic / investment point of view rather than getting influenced by political games, especially in times of austerity and very difficult economic environment for those areas. He will also emphasise the opportunity for Cable to show the maturity of the Libdems as coalition partners, working for the long-term, and will draw from the Coalition government experience lib-dems have had in Scotland. He agrees with the need for this to be looked at by Brussels rather than scrutinised again on plurality ground in the UK. -Alex Salmond is very keen to also put these issues across to Cable and have a call with you tomorrow or Wednesday. His team will also brief the Scottish press on the economic importance of News Corp for Scotland." (emphasis added)
¶3.74 The desire to deploy economic arguments of this sort, based on the economic importance of
a business within a community, was wholly inappropriate. Such arguments were irrelevant to the decision which the Secretary of State had to make and could not lawfully be taken into account. Any decision influenced by them would have been impugned if the subject of judicial review. At best Mr Michel and News Corp completely failed to appreciate this. Mr Salmond's role is considered further below.127
¶3.75 In the days leading up to and immediately after the announcement of the decision to
intervene, Mr Michel had further exchanges with a person or persons whom he described as an "adviser" or "main adviser" to Dr Cable.128 Mr Michel seemed optimistic that he might be able to meet with officials but his hopes were dashed on 8 November 2010 when he reported I to James Murdoch:129
1328"Just had a private call with Vince's main adviser. He said he believed there were huge risks for me to meet with him to talk about anything that has to do with the "OfCom business", which he rules out completely.
¶PART I | The Press and Politicians
Too much scrutiny. They also want to be able to say they took an independent view. Asked me to be in touch regularly in coming weeks, if only to provide him with any evidence / materials we would like Vince / him to read".
¶3.76 Mr Michel's persistence yielded some useful information when he got an indication (rightly
as it turned out) as to the imminence of the decision (but not its substance). On 2 November 2010 he reported that he had been told by Baroness Rawlings, the Government's DCMS spokeswoman in the House of Lords, that: "she believed Cable was preparing to make a decision within a few days of our filing becoming public."130
¶3.77 On the morning of the intervention announcement itself, Mr Michel was in contact by text
with Dr Cable's adviser whom is reported to have texted that News Corp had: "put a v strong case which will stand you in good stead on this".131 It is possible that the adviser was referring to the coming steps in the process, because the intervention decision had gone against News Corp.
¶3.78 Mr Michel continued to lobby despite the set back which the intervention was for News
Corp, hoping no doubt to increase the chances that the next decision in the process would be more favourable to his employer. On 9 November 2010 he met with Rupert Harrison, a Special Adviser to the Chancellor of the Exchequer, and the terms of his email report to James Murdoch suggests that he had recently also spoken to Vicky Pryce and David Laws. Whatever he was actually told, (as to which I expressly make no finding not least because it has not been the subject of evidence) what Mr Michel reported did not in fact reflect what actually happened:132
"Vince made a political decision, probably without even reading the legal advice, as confirmed also to us by Vicky Price and David Laws yesterday I underlined the impact such regulatory process has for us financially; the signals it sends to major global potential investors. Rupert said the case would be made to BIS".
¶3.79 A text message from Mr Michel to Mr Harrison on the same day also raises the issue of the
Treasury making a case to BIS. It records the former asking the latter if the Rt Hon George Osborne would send a letter to Dr Cable on the merger and its economic importance. Mr Michel went so far as to offer assistance with the content:133
"Rupert, just spoke with James. It would be helpful if George were to send a latter to Vince on our Sky merger and its economic importance, separate from the Ofcom process. Do you think it is a possibility? I can of course help with the content. Best, fred [sic]."
¶I 3.80 Mr Osborne made clear that the invitation to write to Dr Cable was not acted upon:134
1329"[Rupert Harrison] says –and I believe him – that there was a general discussion that was not focused on the BSkyB bid. There is a reference in the email to making the case to BIS. He's checked and there is no contact that he's been able to see, between the
¶Chapter 6 | The BSkyB Bid
Treasury – between Mr Harrison and the business department. So that certainly was not – if it was raised – was not followed up. He makes the point to me that he wouldn't have known whether Dr Cable had read the legal advice or not, because he wouldn't have had a conversation with Dr Cable..."
¶3.81 Mr Michel displayed particular tenacity in trying to secure a meeting. After being rebuffed
in relation to a meeting about the bid on 8 November 2010, he entered into a protracted email exchange with Giles Wilkes, one of Dr Cable's SpAds, seeking instead a more general meeting.135 Mr Wilkes agreed in principle to such a meeting but would not agree to it taking place whilst decisions about the bid were pending. When asked when would be good for him, he replied: "Let us assume it is when a google of "Vince Cable, "News International" and "Sky" doesn't turn anything up!" Mr Michel persisted by seeking to elicit whether there had been meetings with any of the other interested parties: "So that means no other possible interested parties in the transaction have met with you at all since June [Telegraph, FT, Associated, BT, BBC. etc.]? To which he received this reply:136
"As it happened, I don't think I've talked about this issue with any of them. Of course, in briefing at Conference, I had to wander into a room full of media people, and people from the media contacted me on other matters. And I know someone senior at Sky in a personal capacity, but we have studiously avoided discussing this since it became such a hot issue. I'm sure we're both equally interested in staying within the bounds of proper conduct – forgive my caution".
¶3.82 Mr Michel concluded the exchange with a mollifying response before reporting to James
Murdoch that: "Vince is "very disciplined" about this".137 That was on 15 November 2010. Mr Michel let the matter rest but he did not give up. He resumed the attempt on 14 December 2010 after Ofcom had published an issues letter:138
"Just spoke to Vince's main adviser. Neither date I put forward for a meeting with Vince (7th or 10th Jan) is likely to work. Vince is out of the country at that time, on current plans. I was told that he has yet to get "his full views on the advisability of a meeting – he is very keen to observe all the correct form and may therefore regard the possibility with an element of concern until extremely thoroughly briefed on all possible consequences. I think meeting, if it happens, will be in mid-January. Let's see."
¶3.83 Unlike Dr Cable, at this stage Mr Hunt had no objection to meeting News Corp, although he
1330I came to change his mind. When Mr Michel contacted him directly by text on 9 November 2010 seeking a meeting for James Murdoch, Mr Hunt agreed.139 But before the meeting took place Mr Hunt received advice from his officials. The advice, which had been approved by in- house legal advisers, recommended against the meeting because DCMS had no formal role in the intervention decision:140
¶PART I | The Press and Politicians
"There is no role in the process for the DCMS so we would recommend that you do not have any external discussions on the BSkyB media merger nor write to SoS BIS about it. If you want to contribute, you could write a letter stating facts backed up with evidence, provided it recognises the final decision is for the Business Secretary of State acting alone. However this carries risks to the robustness of the decision".
¶3.84 Mr Hunt cancelled the meeting, explaining to the Inquiry that although he did not think that contact would have been wrong, it risked creating a parallel process:141
"This was probably the first time that I heard the phrase quasi-judicial or had some kind of exposure to what the implications of quasi-judicial meant, and we had a meeting in the diary initially and I decided to cancel that meeting not because I thought it was wrong to have contact with News Corporation, but because I thought they were probably wanting to have the meeting with me that Vince Cable had refused to have with them, and that therefore to have that meeting would be to create a parallel process where another government department is getting involved in the process in a way that might not be seen to be appropriate."
¶3.85 The position was reported to James Murdoch by Mr Michel on 15 November 2010 by email:142
"Jeremy tried to call you. He has received very strong legal advice not to meet us today as the current process is treated as a judicial one (not a policy one) and any meeting could be referred to and jeopardize the entire process. Jeremy is very frustrated about it but the Permanent Secretary has now also been involved".
¶3.86 Use of the phrase "very strong legal advice" is an overstatement of the true position, which was a recommendation by officials which had been cleared by lawyers.
¶3.87 Mr Hunt was indeed frustrated and for essentially economic reasons. He told the Inquiry:143
"I may have been frustrated. I was worried about a bid in my sector that could potentially mean that thousands more jobs would be created, and the main protagonist was concerned about the process they were having to go through, so I may well have been worried."
¶3.88 Mr Michel continued in his email to propose that his principal should instead telephone Mr
¶Hunt. It is:144
"My advice would be not to meet him today as it would be counter-productive for everyone, but you could have a chat with him on his mobile which is completely fine,
¶I and I will liaise with his team privately as well."
¶3.89 It is surprising that Mr Michel, whose own belief appears to have been that Mr Hunt had received very strong legal advice not to meet James Murdoch, thought it appropriate to
1331¶Chapter 6 | The BSkyB Bid
encourage telephone contact. The displeasure of James Murdoch to this news is apparent in his reply to Mr Michel: "You must be fucking joking. Fine. I will text him and find a time".145
¶3.90 The call went ahead. Mr Hunt recalled: "I just heard Mr Murdoch out, and basically heard
what he had to say about what was on his mind at that time."146 He agreed that he had probably been sympathetic but emphasised that he been careful to observe propriety:147
"Well, I wouldn't have given him any reassurance about the media plurality decision that Vince Cable was taking because that was not my –that was not anything I could get involved with, and I would have made that clear to him, so I probably gave him a sympathetic hearing, but I wouldn't have said that I can get involved in that decision because I had taken and accepted the advice that I couldn't."
¶3.91 James Murdoch's evidence was: "I believe he called me to apologise for cancelling the meeting but – I don't have a specific recollection, but I think that's what's in the records."148
¶3.92 Jonathan Stephens, the Permanent Secretary at DCMS, subsequently explored the legal
position further, obtaining in house legal advice which fully addressed the relationship between DCMS and BIS in relation to the bid:149
"Whilst there is nothing legally which formally precludes the Secretary of State CMS from making representations to the Secretary of State BIS to inform the latter's decision as to whether to refer the public interest considerations in this merger to the Competition Commission, it would be unwise to do so. This is because the task of assessing the impact of the merger on media plurality is expressly given to Ofcom, and because the Secretary of State CMS will almost certainly be able to see neither the report itself nor the underlying materials. Furthermore, and partly as a consequence, any representations made by the Secretary of State CMS are likely to raise the risk of challenge to a decision made by the Secretary of State BIS because it will appear to be purely political in nature (although, of course, it may well not be in fact, and thus be of limited assistance to him in making his assessment."
¶3.93 Whatever the detail of the telephone call on 15 November 2010 there is no evidence that
Mr Hunt sought to communicate it to Dr Cable. Mr Hunt correctly accepted that he should not become directly involved in the quasi-judicial process.150 In evidence, he recognised with hindsight that it would have been better for the conversation to have been heard and minuted by his officials.151 I agree.
¶3.94 Mr Michel soon pursued the private liaison with Mr Hunt's team which he had proposed to
1332take. In an email dated 23 November 2010 he relayed:152 I
¶PART I | The Press and Politicians
"I will have a session with Hunt's adviser next Wednesday to update on Ofcom process and next steps. Jeremy has also asked me to send him relevant documents privately".
¶3.95 Having established this private channel of communication with DCMS about the bid before
the decision was unexpectedly transferred to Mr Hunt, Mr Michel later sought vigorously to exploit it once the decision had been transferred.
¶3.96 Before the transfer, News Corp fruitlessly continued their lobbying of prominent Liberal
Democrats, still believing that it might indirectly influence Dr Cable. On 19 November 2010 Mr Michel reported to James Murdoch:153
"Was told today by Cable's adviser to approach any meeting with Lord Oakeshott as a proxy for Vince Cable, an intro. discussion on the substance of Rubicon and possible way forward. Again, given his position of Chair of Cable's business advisory council, he is the most influential person on any decision Vince will make" (emphasis added)
¶3.97 James Murdoch had seen a prominent Liberal Democrat, Paul Marshall. Mr Marshall informed
¶James Murdoch (forwarding an email via Mr Michel) that:154
"I have relayed the substance of our conversation to Vince's office, but as you know, Vince is highly independent-minded so I can make no promises as to his greater willingness to hold a meeting..."
¶3.98 On 2 December 2010, Mr Michel had conversations with an adviser to the Deputy Prime
Minister and an adviser to the Prime Minister. In relation to the former he reported to James Murdoch:155
"Honest discussion on the importance for us of getting Labour on board / comfortable with the transaction as it will influence Cable a lot he will insist on the need for Vince to meet with us once Ofcom report published need to support Nick when he makes announcement on copyright which goes against his election promise – timing end January – will be very tough for him with youth voters again".
¶3.99 Tim Colborne, a SpAd working to Mr Clegg confirmed that he was the adviser in question, but disputed the accuracy of Mr Michel's email. Mr Colborne's note of the meeting recorded I discussion on three topics: the Digital Economy Act; the BSkyB decision making process; and the broadcast landscape more generally. On the topic of BSkyB he said:156
1333"My recollections of the discussions in relation to BSkyB are that Frederic Michel asked me about how the process was going, and I informed him that I had no involvement in it, and knew nothing about how it was proceeding. I have never had a role in relation to the BSkyB bid, which was exclusively a matter for the relevant Secretary of State (who at that time was the Secretary of State for Business, Innovation and Skills). I
¶Chapter 6 | The BSkyB Bid
further informed him that even if I had known, it would not be appropriate for me to speak to him about it. Frederic Michel went on to explain how the decision-making process was supposed to work... I do not recognise Frederic Michel's own account of this meeting as set out in his email to James Murdoch. I have no recollection of an "honest discussion on the importance for us of getting Labour on board", and I completely reject the suggestion that I offered to "insist on the need for Vince to meet with us once [the] Ofcom report [was] published". I would not have offered to do so, and did not do so. When making handwritten notes of meetings, I always mark action points with an asterisk. There were no action points arising from this meeting."
This is, perhaps, but one example of the need for real caution in relation to the accuracy of Mr Michel's communications.
¶3.100 About his conversation with Mr Cameron's adviser, Mr Michel recorded only one line relating
to the bid: "On Sky transaction: recognised need to look at it only from a plurality point of view".157 This was a correct statement of the approach which the decision maker was required to take but it is at odds with the belief expressed in Mr Michel's earlier emails that wider political issues would influence the decision.
¶3.101 When Ofcom published an issues letter, Mr Michel set about gauging the reaction. On 14
December 2010, he reported to James Murdoch in terms which show that he had not given up on a meeting:158
"Very good debrief with Hunt on the Issues letter. He is pretty amazed by its findings, methodology and clear bias. He very much shares our views on it. We are going to try to find a way for you to meet with him one/one before Xmas."
¶3.102 On this occasion Mrs Brooks too was passing on information, conveying to Mr Michel what she said was Mr Osborne's response:159
¶"Same from GO – total bafflement at response."
¶3.103 Mr Osborne did not remember mention of the bid in conversation, and had not read Ofcom's
letter, but he did not doubt Mrs Brooks' account that it had taken place and he remembered the occasion, a dinner in a restaurant. Neither did he take issue with Mrs Brooks' evidence that he looked perplexed:160
1334"I have read the Ofcom issues letter in preparation for appearing before you today I and I think that is the first time I've ever read that letter. Certainly it jogs no memory and I've done a search of my private office of whether the Ofcom issues letter was brought to my attention, and there's no – we can find no evidence that it was. So I'm perfectly prepared to accept that there was a conversation; I just have no memory of it, and perhaps the reason I was perplexed or baffled was because I hadn't actually read the Ofcom issues letter".
¶PART I | The Press and Politicians
¶3.104 Mr Osborne was clear that the process was quasi-judicial and he did not seek to influence Dr
Cable's decision. Indeed, he made plain to the Inquiry the political reasons why he did not have a strong view as to the outcome of the bid:161
"I didn't have a strong view about its merits because as far as I could see, it was just going to cause us trouble one way or the other. Indeed, so it has proved to be, and I just thought it was either going to offend a group of newspapers and indeed broadcasters who we wanted to have good relations with if it was rejected – sorry, if it was accepted, and if it was rejected, it was going to offend another bunch of people who we want to have good relations with. So I regarded the whole thing as a political inconvenience and something we just had to deal with and the best way to deal with it was to stick by the process".
¶3.105 Mr Michel reported having seen Mr Foster from whom he said had had: "Some important
feedback".162 Amongst the many emails reporting Mr Michel's conversations with Liberal Democrats, recited above, that of 19 December 2010, relaying a conversation with Mr Clegg's Chief of Staff, Jonny Oates, stands out because the view recorded is unequivocally focused on the correct test and the correct procedure:163
"Just had a private chat with Clegg's chief of staff regarding the ongoing process. He was very surprised when I pointed out to him that Cable will be tempted to take a decision with a lot of political influence. For him, the referral is not a matter for "lib-dems", it is a matter for the Secretary of State in accordance with his statutory obligations. Said he was unclear therefore why News Corp is seeking out the views of people who have no locus in the decision making process and thinking that their views indicate that the decision will be "political. For him, senior lib-dems who are going around giving us advice / recommendations are not representative of Vince's mindset and way of making decisions. This is similar to what Vince's adviser told me on Friday night: until the end, Vince will be keen to make up his own mind and not be influenced by anyone. I told him it was hard to believe given all the feedback we are getting. Contrary to my assertion, he said the Secretary of State will take the decision on its merits in accordance with his statutory obligations. If we have concerns, we should express them directly with BIS or Ofcom."
¶I 3.106 The evidence, discussed earlier in this Section, shows that Dr Cable did focus on the statutory
1335test, took specialist legal advice and made up his own mind. However, insofar as Mr Oates' intention was to reassure News Corp that the bid was being considered with scrupulous fairness by Dr Cable, what happened next entirely changed the perspective.
¶Chapter 6 | The BSkyB Bid
¶4.21 http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Draft-Criteria-for-a-Regulatory-Solution.pdf pp1-2, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Witness-Statement-of-Dr-Rowan-Cruft.pdf p10 ibid ibid p5, para 21, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Summary-of-Evidence-presented-by- the-BBC.pdf pp6-7, paras 13-17, ibid ibid, p102 http://www.publications.parliament.uk/pa/cm200910/cmselect/cmcumeds/532/53204.htm pp27-28, lines 14-19, Alexander Owens, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript- of-Morning-Hearing-5-December-2011.pdf Although this aspect of the evidence has not been investigated in detail, it contrasts with the evidence of Steven Nott who spoke about the security ramifications of the messaging system to Vodafone as long ago as 1999 before seeking to interest the press, the television and other mobile providers in the issue: http://www.levesoninquiry.org.uk/ wp-content/uploads/2011/12/Witness-Statement-of-Steven-Nott.pdf pp6-7, paras 22 and 24, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Third-Witness-Statement- of-DAC-Sue-Akers.pdf p3, para 4, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/10/Fifth-Witness-Statement-of-Richard- Caseby.pdf pp3-10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Witness-Statement-of-Matthew-Sprake. pdf Mr Sprake may prefer to call himself a photographer, but in substance he was a private investigator equipped with a camera p32, lines 9-25, Paul McMullan, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Afternoon-Hearing-29-November-2011.pdf pp16-17, lines 23-1, Gerry McCann, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Afternoon-Hearing-23-November-2011.pdf p22, para 43 http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Witness-Statement-of-JK-Rowling2. pdf p50, lines 10-25, Thomas Mockridge, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript- of-Morning-Hearing-17-January-2012.pdf; p119, lines 5-17, Hugh Whittow; p9, lines 3-18, Nicole Patterson, http:// www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of-Morning-Hearing-12-January-2012. pdf; pp12-13, lines 15-end, John Witherow, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/ Transcript-of-Afternoon-Hearing-17-January-2012.pdf; p5, para 25, http://www.levesoninquiry.org.uk/wp-content/ uploads/2012/01/Witness-Statement-of-Justin-Walford.pdf; p13, para 49, http://www.levesoninquiry.org.uk/wp- content/uploads/2012/01/Witness-Statement-of-Richard-Wallace.pdf; p9, para 33, http://www.levesoninquiry.org.uk/ wp-content/uploads/2012/01/Witness-Statement-of-John-Witherow.pdf p3, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Sandra-Laville.pdf p2, para 6, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Sandra-Laville. pdf p40, lines 10-15, John Twomey, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-19-March-20121.pdf Part G Chapter 3 pp25-26, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of-Morning-Hearing-5- December-2011.pdf pp38-39, lines 13-39, Alexander Owens, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/ Transcript-of-Afternoon-Hearing-30-November-2011.pdf pp36-37, lines 25-7, Philip Coppel, ibid p119, lines 19-24, Richard Thomas, ibid p51, lines 12-18, Rupert Murdoch, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Transcript-of- Morning-Hearing-25-April-2012.pdf p81, lines 14-19, Tony Blair, ibid David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Exhibit-DC-2.pdf pp2-4, Rupert Murdoch, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Exhibit-KRM-10.pdf European Intervention Notice, 4 November 2010, p245, Dr Vince Cable, http://www.levesoninquiry.org.uk/wp- content/uploads/2012/05/Exhibit-VC1-2.pdf p53, lines 14-19, ibid p22, lines 22-23, ibid pp29-30, para 5.52-5.55, ibid pp71-71, lines 8-3, Sheryl Gascoigne, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Morning-Hearing-23-November-20111.pdf [2012] EWCA Civ 1288; http://www.bailii.org/ew/cases/EWCA/Civ/2012/1288.html p6, para 37, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-Baroness- Buscombe1.pdf p2, para 7, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Tim-Suter-of- Perspective-Associates.pdf p22, para 31, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Lord-Black-of- Brentwood1.pdf K pp35-36, lines 3-13, Angela Philips, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Transcript-of- Morning-Hearing-13-July-20121.pdf pp5-6, para 2, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Submission-by-George-Eustice-MP. pdf Defamation Act Schedule 2.7, http://www.irishstatutebook.ie/pdf/2009/en.act.2009.0031.pdf K p44, lines 19-21, Evgeny Lebedev, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Transcript-of- Afternoon-Hearing-23-April-2012.pdf Part K, Chapter 7, para 4.42 See remarks of Munby J in Kelly v BBC [2001] Fam 59 at 70, summarising that proper evidence, rather than assertion or assumption will be required December 2010: Dr Cable's comments and the transfer of function
¶The comments and their context 4.1 In the course of his work as a constituency MP, on Friday 3 December 2010, Dr Cable
conducted a constituency surgery. Two undercover journalists pretended on that occasion to be constituents and local mothers concerned about the impact of proposed Child Benefit changes on their families. More broadly, they sought, and then actively questioned Dr Cable about, his views on the coalition Government.164 He spoke freely about the bid and "the Murdoch press" saying (amongst other things):165
"You may wonder what is happening with the Murdoch press ...I have declared war on Mr Murdoch and I think we're going to win" and "I didn't politicise it, because it is a legal question, but he [Mr Murdoch] is trying to take over BSkyB, you probably know that ...He has minority shares ...And he wants a majority. And a majority-control would give him a massive stake. I have blocked it, using the powers that I have got. And they are legal powers that I have got. I can't politicise it, but for the people who know what is happening, this is a big thing. His whole empire is now under attack. So there are things like that, that being in Government ...All we can do in opposition is protest".
¶4.2 Dr Cable did not deny making the comments but wished to explain two factors which he said
had influenced what he had said. First, he described what had happened in his constituency office, and how it affected the words he chose, in this way:166
1336"First, on that evening there were high levels of tension in the office due to disturbances outside caused by a group of protestors who had tried to force entry, and were verbally threatening staff and residents. They were later confronted by the police. I had invited in a small group of protestors and had just finished a highly confrontational discussion with them. My own lack of concentration in the subsequent interview had a lot to do with this abnormal and tense environment. I volunteered strong views on the BSkyB takeover since that, together with university finance, was the issue uppermost in my mind. I should also draw attention to other comments that were made, recorded and reported by the journalists which caused me some embarrassment but do illustrate this factor further. I talked about a "big battle" going on over immigration caps, and "big arguments" on banks, tax thresholds, and civil liberties. I used the word "war" several times. These comments show how this high level of tension had spilled over into the language I used throughout the conversation, and not just when discussing I one particular topic".
¶PART I | The Press and Politicians
¶4.3 He expanded upon this evidence orally:167
"I think it needs – in order to explain the rather emotional way in which I dealt with this and the very strong language, I think it is important to understand there was, I think, a near riot taking place outside my constituency office, people were trying to force entry, we had the police present trying to calm the situation. In order to prevent the disorder getting out of control, I invited in some of the protesters into my office. We had a very long discussion, very angry people upbraiding me about Afghanistan and Palestine and student fees and capitalism and other things, and somebody was waving a camcorder in my face, a few inches from my face, so I was struggling to keep my temper in this situation. So at the end of that interview, when I'd finally seen them out, I was in an extremely tense and emotional frame of mind, and the two women, who I thought were constituents coming to see me about a constituency problem, were the next people that I saw. As I've tried to explain here – I'm normally very calm in dealing with different situations – I did offload onto them a lot of pent-up feelings, not just about the BSkyB case that I was dealing with, but about my colleagues in government and a variety of other issues in language that I wouldn't normally use, in what I thought was a private, confidential conversation."
¶4.4 Dr Cable next described a very different kind of influence, namely a sense that he was being
intimidated by the threat of retribution through the newspapers owned by NI. He put it in these terms in his witness statement:168
"Second, the confrontational way in which my personal views of News Corporation, were expressed was due to reports coming back to me of how News Corporation representatives had been approaching several of my Liberal Democrat colleagues in a way I judged to be inappropriate. The reports suggested that News Corporation representatives were either trying to influence my views or seeking material which might be used to challenge any adverse ruling I might make, following the completion of the Ofcom report. These colleagues expressed some alarm about whether this whole affair was going to lead to retribution against the Liberal Democrats through News International newspapers. As it happened evidence of these reports was later borne out in an article by Toby Helm in the Observer on 23 July 2011 (which I have included in exhibit "VC1"). This added a sense of being under siege from a well organised operation. Coming from a party that had hitherto been at best ignored by News International, this was a new and somewhat unsettling experience. I could not help contrast this behaviour with that of other parties to the case who were content to make written submissions or other cases (like Northern & Shell). My references to a "War on Murdoch" were making the point, no doubt rather
¶I hyperbolically, that I had no intention of being intimidated. Clearly, I should not have
volunteered my unprompted opinion, even in a private, confidential conversation in a constituency surgery. I subsequently apologised."
¶4.5 He developed this evidence orally, explaining that there were two concerns about the
1337activities of Mr Michel and others. First, he felt that the bid was being politicised. Second, that he and his party were being threatened with retribution:169
¶Chapter 6 | The BSkyB Bid
"Well, perhaps preface my answer by saying I was describing the – the interview in my office took place a month after the intervention notice, and I was describing a series of reports I'd had from colleagues, often second or third-hand, but nonetheless plausible reports, of significant numbers of my Parliamentary colleagues in the Lords and in the Commons having had interviews with Mr Michel and possibly others, and I was concerned, indeed I was more than concerned, I was angry, which is what came out in my response, at the way this was being dealt with. I was concerned on two levels. First, there was a systematic attempt to politicise the process, to imply that somehow or other the whole process was governed by the Liberal Democrats, which it wasn't, and I think in his email exchange, Jonny Oates – it is there, I think 1681 – does describe his own interpretation of what was going on as a systematic attempt by News International representatives to politicise the process. And secondly, and actually more seriously, I had heard directly and indirectly from colleagues that there had been veiled threats that if I made the wrong decision from their point of view of the company, my party would be – I think somebody used the phrase "done over" in the News International press, and I took those things seriously, I was very concerned. I had myself tried to deal with the process entirely properly and impartially, and I discovered that this was happening in the background. I frankly stored up my anger at what was taking place, but in that very special and tense situation, I rather offloaded my feelings."
¶4.6 After Dr Cable had given evidence, a fellow Liberal Democrat MP, Norman Lamb, came
forward to the Inquiry further to explain the sense of threat. In particular, he recounted two meetings with Mr Michel which he said took place in Portcullis House, Westminster, on 10 June 2010 and 27 October 2010. He described a range of subjects being recounted on both occasions, including the proposed takeover of BSkyB. His recollection of the first meeting was "fairly vague". That meeting took place five days before the bid was announced. In his witness statement, Mr Lamb stated that the proposed takeover had been discussed.170 In his oral evidence he clarified that, on that occasion, what was mentioned was a potential, not actual, bid.171 Mr Michel was "certain that we did not discuss the BSkyB bid at this meeting" because it had not been announced and he would not have mentioned it if he had been aware of an imminent announcement.172
¶4.7 Much more significantly, of the second meeting he stated:173
1338"During the second of these meetings – on 27 October, 2010 – Mr Michel again raised with me the position with regard to the proposed takeover of BSkyB. He argued strongly, on the basis of the legal position, that there were no grounds for a referral. During the discussion he raised the issue of News International newspaper coverage given to the Liberal Democrats. He said he felt that the coverage since the election I had been very fair. He specifically mentioned The Sun and indicated that it had given the Liberal Democrats reasonable coverage since the general election. He then implied that if the decision surrounding the bid did not fall in their favour, it would be a pity if things were to change and they were no longer able to report in such
¶PART I | The Press and Politicians
a positive way. I cannot remember the exact phraseology used but the message was very clear. I chose not to respond. I took the view that this was part of the lobbying operation in the run up to a decision on the bid. I was very concerned by what I heard and reported it to Nick Clegg and also to Vince Cable. We were all very clear that nothing of this sort should influence in any way how the bid was considered" (emphasis added).
¶4.8 Mr Lamb's account of the meeting on 27 October 2010 was corroborated by a manuscript
note which he made some time after the event: "I can't confirm that it was definitely the same day, but it would have been within days of the meeting taking place"; he produced this for the first time on the day on which he gave his oral evidence. It was one of a number of notes which he had made during the early days of the coalition Government "...of interesting things that had happened." and it was concisely expressed:174
"Wed 27/10 0900 meeting Fred Michel News International. An extraordinary encounter. FM is very charming. He tells me News Int. papers will land on VC's desk in next 2 weeks. They are certain there are no grounds for referral. They realise the political pressures. He wants things to run smoothly. They have been supportive of Coalition. But if it goes the wrong way he is worried about the implications. It was brazen VC refers case to Ofcom – they turn nasty. Then he talked about AV – how Sun might help the debate – use of good graphics to get across case. James M has met Nick – worth working on him to he could be receptive to case. Times will give it fair hearing. So refer case and implication was clear. News Int turn against Coalition and AV."
¶4.9 A further manuscript note evidenced Mr Lamb reporting the conversation to Mr Clegg on 2
November 2010. Its representation of Mr Clegg's reaction casts an interesting light on political perceptions of the power and conditionality of press support:175
"...He is horrified by what I tell him of Fred Michel's meeting last week re News International. - we will lose the only papers who have been positive."
¶4.10 Mr Michel was hoping that he might through Mr Lamb secure a meeting with Dr Cable. He described the meeting as "very friendly and open"176 and recalled explaining to Mr Lamb the I growing frustration at News Corp and the sense of unfairness at not being able to make its
1339case at a meeting. He explained at some length in his third witness statement what was said about media coverage, strongly denying that any threat was made, and positing that there must have been a misunderstanding: "...It seems to me that Mr Lamb has, in his own mind, linked various topics of conversation in a way that was certainly never intended by me....".177
¶Chapter 6 | The BSkyB Bid
¶4.11 The Deputy Prime Minister recalled that Mr Lamb had spoken to him, stating:178
"At one point, I was – it was brought to my attention by Norman Lamb, a friend and colleague of mine, a Liberal Democrat MP, that he had been – the way he described it at least – told that it would be good for the Liberal Democrats to be open to the bid, otherwise we would expect unfavourable treatment from the Murdoch press, and Norman was quite agitated about that. I have to say, since we hadn't received particularly favourable treatment in the first place, I didn't think it was a hugely credible threat, and anyway it was part of so many rumours and counter-rumours and claims and counterclaims that I just said to him, "Look, we just must not be knocked off-course from allowing this process to proceed in an independent, objective and quasi-judicial manner." And throughout all of this, I was very conscious that if I had any role at all, it was just to make sure that Vince Cable, as the relevant Secretary of State, was given the kind of time and the space to discharge his quasi-judicial functions and was insulated from political influence one way or the other."
¶4.12 Mr Clegg did not recollect Dr Cable speaking to him about veiled threats or bullying from
¶News Corp or NI.179
¶4.13 I am in no doubt that Mr Lamb took what Mr Michel said on 27 October 2010 about media
coverage to be an implied threat and, given the impact that it had on him, whatever Mr Michel said could legitimately have been understood as such a threat. That explains why he reported it as such to both Mr Clegg and Dr Cable. However, I am prepared to accept Mr Michel's evidence that, however it might have appeared and however clumsily he might have spoken, he was not, in fact, intending to threaten Mr Lamb or the Liberal Democrats. His modus operandi, which is very well evidenced in the voluminous emails and texts messages which he sent, as well as the evidence of others who dealt with him, tends to support his denial.
¶4.14 Mr Michel went about his work in a different way. He mounted charm offensives, flattered
and sought to persuade others of the merits of his employer's bid. In his internal emails, there is no mention or hint that he was looking for other ways to pressurise or persuade, let alone deploy a threat. Further, his later strategy, so far as the bid is concerned, is recorded in his internal emails to colleagues, already discussed, and did not involve threatening the Liberal Democrats. Rather, he wanted News Corp to curry favour with Dr Cable by supporting him and the Liberal Democrats generally. His surprise at the interpretation put upon his words by Mr Lamb was genuine. I am reinforced in my conclusion by Mr Clegg's reaction that it was "not a hugely credible threat" and the absence of evidence that the Liberal Democrats were in fact "done over" by News International's titles as a result of Dr Cable's decision to I intervene. It was not suggested that they were.
¶4.15 That the bid was discussed in politicised terms between Mr Michel and Liberal Democrat
1340MPs is plain and is evidenced not only by Dr Cable's recollection but also by Mr Michel's own reports of his lobbying efforts.180 Whether politicised discussion was in fact the result of a deliberate effort to politicise the decision by Mr Michel and News Corp is not at all clear. News Corp believed, on credible grounds, that it had a strong position on both competition
¶PART I | The Press and Politicians
and plurality grounds. James Murdoch explained that the timing of the bid was deliberately chosen, inter alia, to avoid the issue becoming a political football before the election.181
¶4.16 It is impossible to say, without further and disproportionate investigation, whether it was
Liberal Democrat politicians, Mr Michel, or a mixture which led to the politicised conversations which took place. Still less is it possible to say whether that politicisation was a deliberate strategy or simply a failure to focus on the quasi-judicial nature of the decision and the strict legal test which had to be applied. What can be said with confidence though is that Dr Cable believed that pressure was being exerted by those whom he described as "News International representatives" (although actually representatives from News Corp).
¶4.17 The significance of the context in which the comments were made is that they consequently
fall to be understood as Dr Cable's unguarded and emotional reaction to his role in the bid. In his own words he "offloaded his feelings". That Dr Cable's words were of this nature is further made clear because he was not technically correct when he said that he had blocked the bid. Formally, he had only issued an intervention notice.
¶4.18 Context may explain Dr Cable's comments, but, given his responsibilities, it does not excuse
them. He did not pretend otherwise, either at the time or to the Inquiry, recognising that his words had given rise to an appearance of bias. He told the Inquiry:182
"No, I do understand in my case that the remarks I made did create a perception of bias and therefore made it difficult for me to continue. I fully understand that. It doesn't mean to say I would have been biased; I wouldn't have been. But nonetheless there was a perception issue and that had to be taken into account by the Prime Minister".
¶4.19 Dr Cable also rightly recognised that the transfer of responsibility for the bid was the inevitable result of his own words:183
"Q. ...Do you have any observations to make on the, as it were, transfer of responsibilities to another department or not? A. Well, I was angry with myself at what had happened, but given what you just said about perception of bias, I understood that there was no alternative in this case."
¶4.20 His remarks, once published, made the perception or appearance of bias inevitable, as in
due course was therefore the removal of his responsibilities. It is, however, important to underline that if what he said had not been recorded by a journalist but had, in fact, been heard by a constituent (as he believed was the case), it is certainly possible that what he said
¶I could have returned to impact on the bid after he had decided it: his constituent might then
1341have gone to the press. This only serves to underline the very difficult position faced by those charged with making judicial or quasi-judicial decisions.
¶Chapter 6 | The BSkyB Bid
¶The story breaks 4.21 The Daily Telegraph published a story about their reporters' conversation with Dr Cable online
on 20 December 2010184 and there was further coverage both online and on paper on 21 December 2010. Surprisingly, the initial coverage on 20 December 2010 and the morning of 21 December 2010 did not refer to Dr Cable's comments about the bid. There was suspicion that the Daily Telegraph did not want to cause trouble for a Secretary of State who had made a decision to intervene which was, of course, in the interests of the Telegraph Media Group (TMG). There can be little doubt that the TMG was not supportive of the bid and that its opposition was based upon commercial grounds. Aidan Barclay, Chairman of TMG, subsequently wrote to James Murdoch in these terms:185
"I am sure you are aware that the Telegraph was not supportive of the News Corp proposed takeover of BSkyB. We took this position as a result of what we believed were and are genuine commercial concerns..." (emphasis added)
¶4.22 However, the Daily Telegraph denied that it was trying to hide the information and maintained
that it deliberately held back parts of the transcript of the conversation in order that it could publish a further instalment and thereby get the maximum return on the story. Whatever the motive, the information did not stay out of the public domain for long. A whistleblower passed a full copy of the transcript to the BBC's Robert Peston who, at 2:30 pm, published the passages which had been excised by the Daily Telegraph on his blog; subsequently, the Daily Telegraph did publish them.186 As for the motive in withholding what would have been the most explosive part of the story, on the basis that this sub-issue was not fully explored and is not essential to the narrative, I make no finding, save only to observe that if that had been the plan, the whistleblower (who obviously had access to the full details of the story) apparently did not know about it .
¶4.23 Before continuing with the events of 21 December 2010, it is appropriate to record that the
use of subterfuge by the Daily Telegraph directed to Dr Cable was not an isolated incident. It was one of a number of instances in which undercover Daily Telegraph reporters sought to elicit unguarded comments from Liberal Democrat MPs. The results were the subject of articles on 21,22 http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Key-Questions-Module-4.pdf p69, Dr Rowan Cruft, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Transcript-of-Morning- Hearing-16-July-2012.pdf pp10-11, pp25-18, ibid http://www.newscorp.com/investor/stock_quotes.html p3, para 10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Mark- Thompson.pdf; pp5-6, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Lord- Patten1.pdf pp7-8, paras 18-19, ibid O'Malley, T and C Soley, Op cit, p64 p8, para 25, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-F2.pdf Information Commissioner's Office, What Price Privacy?, p17, para 5.10 p13, para 18, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-DS-Philip- Williams.pdf p8, para 27, ibid In the United Kingdom MPs can claim expenses, including the cost of accommodation, "wholly, exclusively and necessarily incurred for the performance of a Member's parliamentary duties". In the tax year 2007–2008, MPs' cost of staying away from their main homes was limited to £23,083 p24, lines 12-18, Sienna Miller, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Morning-Hearing-24-November-2011.pdf p17, lines 7-10, Neville Thurlbeck, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of- Afternoon-Hearing-12-December-20111.pdf p13, paras 78-80, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Witness-Statement-of-Gerald- Patrick-McCann.pdf; In July 2008 proceedings were commenced against Associated Newspapers Ltd in respect of 67 articles published in the Daily Mail and the Evening Standard over a five month period, as well as over 18 articles on the latter's website. These proceedings were compromised by the payment of a substantial donation to the Madeleine search fund and the publication of an apology in the Evening Standard. The Daily Mail were willing to publish a number of 'free adverts' to aid the search, but refused to publish any apology, claiming that the supportive articles they had written counter-balanced the others. As Dr McCann explained, by that stage he did not wish to embark on a protracted dispute with the newspaper, particularly given the need to maintain good relations with the press in continuing to publicise the search for Madeleine p18, para 30a, ibid p3, para 11, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-John-Witherow. pdf p10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Report-by-Elizabeth-Filkin.pdf p2, para 23, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Michael- Sullivan.pdf p40, lines 21-23, John Twomey, ibid pp64-65, line 6-1, Bernard Hogan-Howe, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/ Transcript-of-Morning-Hearing-20-March-2012.pdf pp11-12, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/First-Witness-Statement-of-Richard- Thomas-CBE.pdf pp54-55, lines 25-6, Richard Thomas, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript- of-Morning-Hearing-9-December-2011.pdf; p2, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/ Fourth-Witness-Statement-of-Richard-Thomas-CBE.pdf p39, lines 3-22, Philip Coppel, ibid p40, lines 12-15, Richard Thomas, ibid p20, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Witness-Statement-of-Alastair-Campbell.pdf pp14-15, lines 7-12, Tony Blair, ibid David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Exhibit-DC-3.pdf See http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/23_12_10_murdoch_meeting.pdf. This document is dated 2 February 1981 but, since consent had been given by then, this must be a reference to the date upon which the document was produced. The fact that Mr Biffen met Mr Rupert Murdoch on 26 January 1981 is evidenced in the minutes of the meeting of the Cabinet Ministerial Committee on Economic Strategy. subsection 5 below: Handling of the Bid by Jeremy Hunt and DCMS Part I, Chapter 5 pp27-28, lines 16-18, ibid p26, para 5.33, ibid pp11-12, lines 15-17, Sienna Miller, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Morning-Hearing-24-November-2011.pdf Part K, Chapter 7. As part of the response to encouragement by the Joint Committee to promote a voluntary, media- orientated forum for dispute resolution, the Government recognised that there could well be value in there being a range of arbitration options available, noting that methods of redress and the type of body required to secure effective regulation were issues which are central to this Inquiry: see para 68 p46, lines 9-15, Lord Grade, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Afternoon-Hearing-31-January-2012.pdf p24, para 38, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Lord-Black-of- Brentwood1.pdf p1, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Lord-Black-of-Brentwood-Annex-B1.pdf p10, para 4.13, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Ofcom.pdf p6, para 4, ibid Defamation Act Schedule 2.8-2.9, ibid p106, line 18, Aidan Barclay, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Transcript-of- Afternoon-Hearing-23-April-2012.pdf Part K, Chapter 7, para 4.46 See Application 28496/95, EK v Turkey (2002) 25 EHRR 1345. The ECtHR has observed on a number of occasions that in a democratic society, the actions and omissions of Government must be subject to close scrutiny and of public opinion and government must display restraint in resorting to criminal proceeding in this context. In particular, see a number of cases arising out of criminal proceedings taken against the owner of a newspaper for publishing press articles, readers' letters and reports concerning the conflict between Turkish Government and Kurdish organisations where the ECtHR emphasised that there is little scope under Art 10(2) of the Convention for restrictions on the press in relation to political speech and debate: Application 23556/94, Ceylan v Turkey (2000) 30 EHRR 73, Application 23144/93, Ozgur Gundem v Turkey (2001) 31 EHRR 49 and 23 December 2010 and provoked a complaint to the PCC from Tim Farron MP, President of the Liberal Democrats. The complaint was upheld, albeit with an important qualification concerning Dr Cable:187
1342"For the Commission to have sanctioned this method, it would have had to be convinced that a high level of public interest could reasonably have been postulated in advance. It did not believe that the Telegraph – although acting no doubt with legitimate intent – had sufficient grounds, on a prima facie basis, to justify their decision to send the reporters in. The complaint was therefore upheld. I The Commission did feel that the newspaper had uncovered material in the public interest regarding the remarks made by Vince Cable about the News Corporation bid
¶PART I | The Press and Politicians
for BSkyB, which had led to him being divested of his role in that decision. However, there had been no suggestion that the intention of the newspaper had been to explore how he had been handling the bid (it made clear in its coverage that Mr Cable [sic] had spoken "despite not being asked about the issue"), and the newspaper itself had chosen not to make it a focus of its first day's coverage. The test for the Commission was whether there were grounds in the first place to justify the subterfuge: the Cable disclosures about Sky were not relevant to that."
¶The response to the story
¶4.24 21 December 2010 had already been an important day for consideration of the bid. At midday,
the European Commission unconditionally approved the bid from the European Union competition perspective.188 That news prompted communication between James Murdoch and Mr Hunt. The former tried to call the latter who texted at 12:46hrs:189
¶"Sorry to miss ur call. Am on my mobile now. Jeremy."
¶4.25 James Murdoch replied at 12:52hrs:190
¶"Have to run into next thing. Are you free anything after 2.15? I can shuffle after this".
¶4.26 A further exchange of texts concluding at 12:56hrs agreed 16:00hrs as a convenient time to
speak.191 At 12:57hrs, Mr Hunt texted again, by this time he had self evidently heard about the European Commission's decision:192
¶"Great and congrats on Brussels, just Ofcom to go!"
¶4.27 The terms of his message were not impartial and are consistent with his broad sympathy
for the bid which he had never hidden. It is a matter of importance, however, that the text message was sent before Mr Peston's story had been posted and whilst responsibility for the bid still rested with Dr Cable.
¶4.28 News of Mr Peston's story travelled fast. At 15:50hrs, Sue Beeby, the second of Mr Hunt's two
SpAds, emailed details of Dr Cable's comments to Mr Hunt.193 Ten minutes later, at 16:00hrs, Mr Hunt and James Murdoch spoke by telephone, as previously arranged. James Murdoch was described as being "totally horrified" by the Secretary of State's comments.194
¶4.29 Mr Hunt sought to consult a senior Cabinet colleague, Mr Osborne, texting at 16:08hrs:
"Cld we chat about Murdoch Sky bid? am seriously worried we are going to screw this up. Jeremy".195 He followed that with a second text also timed at 16:08hrs which read: "Just been
¶I
1343¶Chapter 6 | The BSkyB Bid
called by James M. His lawyers are meeting now & saying it calls into question legitimacy of whole process from beginning, "Acute bias" etc".196
¶4.30 He also emailed Andy Coulson at 16:10hrs asking: "Could we chat about this? Am seriously
worried Vince will do real damage to coalition with his comments..."197 In the result, Mr Hunt did not think that he did speak to Mr Coulson.198 Nor did he think that he had any conversation with No 10 at that stage.199
¶4.31 By the time that Mr Osborne received Mr Hunt's two text messages he was already in a
16:00hrs meeting with Mr Cameron and others discussing what was to be done about Dr Cable's comments.200 He probably did not see the text messages until after the meeting.201 The meeting itself had originally been a routine meeting to review the day's events and to look ahead but, in the result, it was used to react to news of Dr Cable's comments:202
"...Every day, at 4 o'clock, there is a Prime Ministerial meeting to review what's going on that day and look ahead, and I attend that meeting when I'm in London and my diary allows me to do so. So I was going over to Downing Street anyway. The meeting had, in effect, been cancelled and the meeting had become a discussion of what to do about Dr Cable's remarks, and I was part of that discussion, with the Prime Minister, his most senior civil servant and his political advisers..."
¶4.32 Mr Cameron highlighted the gravity and urgency of the situation before explaining the
thinking which pointed towards transferring responsibility for the bid to the Secretary of State for Culture, Media and Sport:203
1344"...Such a situation had the potential to damage the Government's credibility and it was important to act quickly to address the issue. I had rapid discussions with my senior advisers, including the Permanent Secretary, as to the best way forward, as it was clear that Vince Cable could no longer continue in the decision-making role given the nature of the his comments. I consider a range of options for how to handle this matter. I did not want to dismiss Vince Cable from his position as, while he had behaved inappropriately by speaking as he had on this particular issue, he dealt with many other issues effectively as Secretary of State and was providing a valuable contribution to the Coalition Government. Jeremy Heywood, the Permanent Secretary at Number 10, suggested the option of transferring responsibility for media competition issues, including the option of transferring responsibility for media regulation. It seemed to me that this was the most logical, straightforward and effective option and it made sense for the policy issues of media competition and media regulation to be the responsibility of one department." I
¶PART I | The Press and Politicians
¶4.33 Mr Osborne graphically described the political pressures that had been unleashed by the publication of Dr Cable's unedited remarks in Mr Peston's blog only 90 minutes earlier:204
"I think that – on the day, I remember the pressure was enormous to do something about the political crisis that had been unleashed on the government out of the blue at 3 o'clock in the afternoon. Obviously, we had no idea that Dr Cable had said these things. They weren't in the Telegraph's report of the story that morning, which had itself caused some problems, and we had to deal with – I mean, the pressure in government, in modern government, is to – is you have to make sure you have answers to some the [sic] tough questions that the media are throwing at you, even if it comes in the middle of the afternoon, just as you're doing other things."
¶4.34 Mr Osborne recalled that the original suggestion to transfer responsibility for the bid to Mr
Hunt came not from a politician but from (now Sir) Jeremy Heywood, then the Downing Street Permanent Secretary. He too emphasised a desire not to remove Dr Cable from his post altogether, expressing on his part concern about the impact that such a step might have had on the coalition:205
"The principal concern in the meeting – and certainly my principal concern, what I was seeking to say in the meeting – was that this was not something which should lead to the resignation of Dr Cable. I thought what Dr Cable had said was wrong but I didn't think it merited his resignation, and frankly I also had concerns about the impact of such a resignation on the Coalition and the unity of the government. So I was looking for a solution, as indeed were other people in the room, that did not involve someone else becoming the Secretary of State for Business and Dr Cable leaving the government or indeed Dr Cable moving to another portfolio, because that would trigger a wider Cabinet reshuffle which was not something we felt, just before Christmas, with, as I say, the Coalition in its first year, something we wanted to see, and indeed we thought Dr Cable was doing a good job as business secretary, other than on this particular issue of what he'd said about the Murdochs. So we were looking for solutions that did not involve Dr Cable resigning or moving from business secretary, and Jeremy Heywood suggested the solution of moving the responsibility for media plurality to the department for culture, media and sport. So it was, in a way, a structural solution within Whitehall to the problem, and my recollection is once Mr Heywood had proposed that, we thought that was a good solution and would help keep Dr Cable in government whilst removing from him the responsibility for media plurality, and it, I think, also struck us all as rather commonsensical that it would move to the department that was, after all, called the department for media and already had responsibilities for media regulation."
¶I
¶4.35 By around 16:30hrs telephone advice was being sought from the Treasury Solicitor, (now
1345Sir) Paul Jenkins about the issue. Sir Paul, who was at home on leave, spoke to a number of officials, including the Cabinet Secretary, Lord O'Donnell, during the course of the next hour. He confirmed, from a legal perspective, the prevailing view that Dr Cable could not properly retain responsibility for the bid, and went further by advising against delegating the decision to a junior minister at BIS:206
¶Chapter 6 | The BSkyB Bid
"...I confirmed to Sir Gus that it was my opinion that Dr Cable could no longer properly discharge his functions under the Enterprise Act 2000 in relation to the BSkyB bid because, whilst seized of the matter, he had made statements of a kind that tainted, irrevocably, his ability to discharge his functions in a quasi-judicial manner... ...I also advised Sir Gus that, in the particular circumstances of the case, the option of delegating the decision-making responsibility to a junior Minister in the Department for Business, Innovation and Skills would give rise to significant legal risks and this option was not pursued."
¶4.36 Sir Paul regarded the emerging alternative candidate for the decision, Mr Hunt, as the obvious choice:207
"In these circumstances the obvious alternative was for the functions to be transferred to another Secretary of State; and the obvious Secretary of State was the Secretary of State for Culture, Media and Sport. I was aware from the discussions that the Prime Minister was considering this as the natural option".
¶4.37 There was an awareness of the need to check whether responsibility for the bid could properly
be transferred to Mr Hunt. Accordingly, Sir Jeremy contacted the Permanent Secretary at DCMS, Jonathan Stephens. Like Sir Paul, Mr Stephens was also at home, starting his Christmas leave. Mr Stephens recalled being asked whether Mr Hunt had publicly made any comment which might appear to have pre-judged the issue. He was only aware of what his Secretary of State had said on 15 June 2010, the day on which the bid was announced. He caused checks to be made by his officials and with Mr Hunt's SpAds before passing on Mr Hunt's public comments to Sir Jeremy, whom he knew to be consulting lawyers and the Cabinet Secretary.208
¶4.38 Witnesses were understandably unable to recollect the precise terms in which Mr Hunt's
relevant public statements were communicated to the Treasury Solicitor, who was asked to advise. For his part, Sir Paul put it this way:209
"I was provided with the gist of the comments made by Jeremy Hunt by Sir Gus over the telephone. I have now seen the comments attributed to Jeremy Hunt collected at paragraph 172 of the Prime Minister's statement. I believe that the gist as relayed to me fairly summarised the content of those comments".
¶4.39 The comments to which Sir Paul was referring to in the quotation above, as set out in Mr
¶Cameron's witness statement, are these:210
1346"a. An interview in the Financial Times, published on 16 June 2010, where he was quoted as saying: I It does seem to me that News Corp do control Sky already, so it isn't clear to me that in terms of media plurality there is a substantive change, but I don't want to second guess what regulators might decide." b. An interview in Broadcast magazine where he was also quoted as saying:
¶PART I | The Press and Politicians
Rather than worrying about Rupert Murdoch owning another TV channel, what we should recognise is that he has probably done more to create variety and choice in British TV than any other single person. c. The description of Jeremy Hunt in the same Broadcast magazine article, which was displayed on his constituency website, as: like all good Conservatives Hunt is a cheerleader for Rupert Murdoch's contribution to the health of British television."
¶4.40 Sir Paul did not consider that these matters precluded Mr Hunt from taking over Dr Cable's
decision making function in relation to the bid and advised the Cabinet Secretary accordingly. His reasons were recorded in a note produced by Lord O'Donnell for Mr Cameron the next day. In his evidence Sir Paul explained:211
"...I took the view that senior politicians in the office of Secretary of State should be credited with the ability to put aside such personal views, expressed before their holding of a decision-making power, so that they can approach the decision-making process, on advice and with a fresh mind. I did not think that Jeremy Hunt's comments were of a nature that indicated that they could not be put aside; nor that a reasonable and informed person would conclude that they could not be put aside. I acknowledge that there will be occasions when a politician does make such a comment but I do not think this was one".
¶4.41 Sir Paul's advice was accepted and cemented the provisional decision to transfer Dr Cable's functions in relation to the bid from BIS to DCMS and Mr Hunt.
¶4.42 Meanwhile, at 16:58hrs, after the meeting in Downing Street, but whilst legal advice was still
being taken, Mr Osborne replied to Mr Hunt's earlier text messages by referring to the then still provisional decision to transfer responsibility for the bid to Mr Hunt: "I hope you like the solution!"212
¶4.43 By the time he received Mr Osborne's text, Mr Hunt knew something of what was happening
and, in particular, that Downing Street was checking whether public comments sympathetic to the bid were an obstacle to his assuming responsibility for the bid.213 Not only were these comments being considered by the Cabinet Secretary and Treasury Solicitor, they were also scrutinised by the Legal Director at DCMS, Patrick Kilgarriff. Mr Kilgarriff's views on the comments about the bid made by the Secretary of State on 15 June 2010 were recorded in an internal email which Mr Hunt forwarded to Ed Llewellyn, the Downing Street Chief of Staff at 17:30hrs.
¶I 4.44 It is clear from the terms in which Mr Kilgarriff couched his email that whilst he did not think
1347Mr Hunt's comments precluded him from making a decision about the bid, he did foresee that they might prove to be controversial and the subject of challenge. Consequently, he was
¶Chapter 6 | The BSkyB Bid
alive to the fact that a carefully reasoned decision, based on the all the relevant evidence was going to be needed. He rightly foresaw the need for particular care. He put it this way:214
"When did JH say it? I assume it was shortly after News Int announced its intention to buy out the other shareholders in Sky. Therefore at a time when JH was not responsible for policy in this area. If so, it is not helpful and tends towards an element of pre-judging the issue. That said, the view is far from definitive as is demonstrated by the wish not to second guess decision making by regulator and "it isn't clear to me" so unhelpful and enough to draw comment and perhaps challenge but probably not fatal when a well reasoned decision is made with conclusions based on all the relevant evidence" (emphasis added).
¶4.45 It was common ground that the only comments sought and then put to the Treasury Solicitor
for consideration and advice were public comments made by Mr Hunt. Sir Paul was not aware, when he advised, that in fact Mr Hunt had sent a memorandum detailing his views about the bid to the Prime Minister's office on 19 November 2010 and another earlier memo had touched upon the subject on 18 June 2010. Nor was Sir Paul aware that Mr Hunt had spoken to James Murdoch on 21 December 2010 and had, only hours before responsibility for the bid had been transferred to him, congratulated James Murdoch by text on the bid's clearance by the European competition authorities.
¶4.46 Both of the memoranda were updates of a sort which had been encouraged by Mr Cameron
from all of his Front Bench since his days in Opposition.215 Reference to the bid in the June 2011 memorandum was of a passing nature but had prophetically recognised the bid as a political elephant trap:216
"I have met or spoken to most of the big media owners – Michael Lyons / Mark Thompson, [sic] James Murdoch, Archie Norman / Adam Crozier. Following a steer by Nick Clegg, I am sending signals publicly and privately that our rhetoric will be more generous to the BBC than it was in opposition. But the issues that matter to our own supporters – BBC salaries and profligate use of licence fee money – will be sortable when we have the licence fee negotiations next year. I steered clear of commenting on News Corp's plans to buy out the 61% of Sky they do not own on the grounds it was a competition issue for regulators and not for ministers – but there are likely to be further elephant traps in the media landscape which we must be careful to avoid." (emphasis added)
¶4.47 The second note leaves Mr Hunt's sympathetic views about the bid, and the reasons for
them, in no doubt. Crucially, there was nevertheless a very clear recognition that approving the bid was not a Government issue, that the decision had to be kept at arm's length, and that any meeting with Dr Cable had to be confined to policy issues and not to the decision on I the bid:217
¶"A lot has been happening in my sectors so here goes with a brief update:
1348¶PART I | The Press and Politicians
NewsCorp/Sky bid James Murdoch is pretty furious at Vince's referral of Ofcom. He doesn't think he will get a fair hearing from Ofcom. I am privately concerned about this because NewsCorp 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 and create the world's first multi-platform media 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. The UK has the chance to lead the way on this as we did in 80s [sic] 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 there is plurality, but I think it would be totally wrong to cave in to the Mark Thompson [sic] / Channel 4 / Guardian line that this represents a substantial change of control given that we all know Sky is controlled by NewsCorp now anyway. What next? Ofcom will issue their report saying whether it needs to go to the Competition Commission by 31 December. It would totally wrong [sic] for the government to get involved in a competition issue which has to be decided at arms length. However I do think you, I, Vince and the DPM should meet to discuss the policy issues that are thrown up as a result." (emphasis added)
¶4.48 It is not perhaps surprising that Mr Cameron did not remember the existence of the note
when he was considering how to react to publication of Dr Cable's comments on 21 December 2010, more than a month later. Had he done so, I have no doubt that he would have asked for it to be considered by the Treasury Solicitor along with Mr Hunt's public comments about the bid:218
"The issue here is I don't particularly remember this note, and crucially, I didn't recall its existence on the day of 21 December when we were making this decision, and I say that frankly. Obviously if I had recalled it, I would have fed it into the system, as it were, but as I'm sure we'll come to, it's pretty clear from the legal advice we have that that wouldn't have actually made any difference to the outcome."
¶4.49 Mr Cameron's retrospective conclusion was, in fact, borne out by the Treasury Solicitor. The
statement made by Sir Paul to the Inquiry was, indeed, that if had he known about the 19 November 2010 memorandum, it would have made no difference to his advice:219
¶"I am quite clear that my advice to Sir Gus would not have been any different had I I seen the note at the time. Jeremy Hunt appears to have been providing his personal
1349opinion to the Prime Minister at a time when he had no decision-making powers in respect of the bid. Just as in his public statements he offers personal views on the plurality issues. Just as in his public statements he also acknowledges that these are in effect regulatory issues to be taken quasi-judicially. I thus do not think there is anything in the note to indicate that Jeremy Hunt could not have properly set aside his personal views and considered the bid on the basis of the evidence, advice and expert opinion before him once he had inherited the relevant powers."
¶Chapter 6 | The BSkyB Bid
¶4.50 It is noteworthy that Mr Hunt's suggestion that there should be a meeting between Mr
Cameron, Mr Clegg, himself and Dr Cable to discuss policy issues thrown up as a result of the bid was not acted upon, as Mr Cameron was able to confirm:220
"I do not recall responding to Jeremy Hunt's note either in writing or by speaking to him about it. The meeting he suggested take place did not happen and I do not recall any arrangement being made for it to happen..."
¶4.51 Turning to Mr Hunt, he acknowledges that he did not volunteer the fact that he had been
in contact with James Murdoch on 21 December 2010 and had congratulated him on the European Commission's decision by text, nor did he raise the existence of his 19 November 2010 memorandum. Put shortly, he did not think that they demonstrated any view substantively different to that which he had publicly expressed:221
" Q. Were you asked, though, about anything which was not in the public domain, but which might embarrass you should it enter the public domain? A. No. Q. Do you feel that such matters should have been volunteered by you? A. Are you talking about my memo to the Prime Minister? Q. Well, the memo to the Prime Minister, the conversation with Mr Murdoch and the text message we've looked at about the congratulations for Brussels, just Ofcom to go. It's the accumulation of pieces of evidence. It's that material, Mr Hunt, basically. A. I think that all that material is entirely consistent with the overall position that I'd taken that I was sympathetic to the bid and I didn't think there was a media plurality issue, I didn't think we should second-guess the regulators and I thought that due process should be followed. Q. Isn't there a difference, though, between what was stated publicly at interview with the Financial Times and the sort of material we've been looking at? Do you see there as being possibly any difference? A. I don't think there's a substantive difference because substantively my position in all those communications is the same: I, broadly speaking, had the view that BSkyB was already controlled by the Murdochs so I didn't think there was a change in plurality, but I believed that due process had to be respected, so I do not think there's a particular difference."
¶4.52 It is not in the least surprising that the Secretary of State for Culture, Media and Sport had
1350an opinion upon a major media issue, in this case the bid by News Corp, or that he should have contact with a major player in his sector of responsibility, such as James Murdoch: on I the contrary, it would have been more surprising had he not had a view or, indeed, contact with Mr Murdoch. Moreover, what Mr Hunt was saying in private to Mr Murdoch and writing to the Prime Minister was not inconsistent with what he was putting into the public domain. He did, though, go into more detail, his comments were much nearer in time to the transfer to him of responsibility for the bid and he was more emphatic in his support for the bid in private. The mere fact of his private statements increased the quantity (and quality) of what he had said and written on the subject.
¶PART I | The Press and Politicians
¶4.53 In relation to a decision which was as politically charged as this one, and a decision about the
handling of a process which was quasi-judicial and therefore legally challengeable on grounds of appearance of bias, it would have been prudent for Mr Hunt to have reminded those at No 10 of the fact of his 19 November 2010 note and to have volunteered the extent of his private contact with James Murdoch. The additional information, provided openly and transparently, could then have been taken into account and fully informed advice given.
¶4.54 It is not necessary for me to decide whether or not knowledge of Mr Hunt's contact with
James Murdoch would have made any difference to the advice given by the Treasury Solicitor. He has confirmed that knowledge of the note would not have made a difference and the way in which he explained his view makes it is reasonable to infer that he would have maintained that position had he also known about the private contact with James Murdoch. I accept, however, that this is entirely speculative and to have pressed Sir Paul to speculate further as to what his advice might have been ex post facto would have been unfair. More important, for the purposes of the Inquiry, it is entirely unnecessary because whatever the answer, the wider point for the future conduct of politicians (and especially those in power) remains the same. Ministers must be especially vigilant in matters relating to media policy, especially quasi- judicial decisions, and indeed to any circumstance in which they are called upon to exercise discretion which might impact on those with whom they have or have had a relationship, whether working or personal. In short, they must put themselves above suspicion.
¶4.55 The decision which Mr Cameron made, subject to legal advice, and its timing were entirely
understandable. There were enormous pressures on the Government to act quickly. The media storm would only have gathered strength if decisive action had not been taken. News Corp were understandably deeply concerned by Dr Cable's words and a solution which restored confidence in the decision making process was urgently required. There were sound reasons not to remove Dr Cable from office, articulated by Mr Cameron and Mr Osborne in evidence. The Secretary of State for Culture, Media and Sport was the obvious candidate to entrust with the decision because of his portfolio. Finding a suitable decision maker who did not have a prior view one way or another about the bid would most likely have proved to be a wild goose chase. Almost every leading politician has a view, one way or the other, about Rupert Murdoch's companies and it is often strongly held.222 The evidence does not begin to support a conclusion that the choice of Mr Hunt was the product of improper media pressure, still less an attempt to guarantee a particular outcome to the process, a subject to which this Report returns following consideration of Mr Hunt's handling of the bid.
¶4.56 The question of Mr Hunt's disclosures at this point does, however, raise one further point
of interest. Had he disclosed the full extent of his relevant interactions at the outset, an opportunity would have arisen for those responsible for doing so to offer him more specific
¶I advice on the conduct of the bid process and on managing the risks of appearance of bias,
1351tailored to the specifics of the circumstances. That might have made a difference, but I say no more than that.
¶Chapter 6 | The BSkyB Bid