Likelihood of BSkyB Deal Now Just 10 Percent: Panmure

News Corporation’s contentious proposed takeover of BSkyB is “all but dead” following the phone hacking scandal that hit the Murdoch-owned group’s British unit News International (NI), Alex DeGroote, analyst at Panmure Gordon said on Monday, as the deal comes under intense scrutiny from regulators.

Rupert Murdoch, Chairman and CEO of News Corporation
Don Emmert | AFP | Getty Images

British media regulator Ofcom has been weighing up whether or not News Corp meets its "fit and proper owner" criteria.

Shares in BSkyB fell sharply in early trade on concerns that the deal will be delayed after the British government asked the media regulator to re-examine the proposed takeover, in the wake of revelations that led to the closure of the News of the World - the Sunday tabloid at the center of the scandal - on July 10.

“We note with interest comments from Labour leader, Ed Miliband, that he will force a (House of) Commons vote to delay News Corporation's proposed takeover of BSkyB, until the investigation into the News of the World is completed,” DeGroote said in a note to clients.

“Miliband also made reference to the Competition Commission as the optimal regulatory route, rather than the route pursued so far (i.e.'assurances' from key stakeholders). Note, starting the regulatory clock ticking again would put the deal so far back that it might as well be cancelled,” he said.

DeGroote said that while on Friday he had still seen a 50 percent likelihood of the deal going ahead, that figure had now shrunk to just 10 percent and sees another 8 percent downside to the stock.

He lowered his target price to 690 pence ($11) from 730 pence on Monday and kept his “Hold” rating on the stock.