BSkyB deal gets the go-ahead amid outburst of anger from Labour

Jeremy Hunt was not at the BSkyB summer party at the Foreign Office last night but News Corp executives were toasting the Culture Secretary's decision to give the go-ahead to Rupert Murdoch's complete takeover of the satellite broadcasting company.

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Mr Hunt gave his approval to the bid after News Corp agreed to a succession of further undertakings which are designed to guarantee the future independence of Sky News, which is being hived off from the rest of the BSkyB business as a condition of the deal. The deal, likely to cost News Corp around £9bn, is subject to a further seven-day consultation period.

It was the second time in a month that Mr Hunt had spurned the hospitality of Mr Murdoch's empire for fear of being accused of a conflict of interest. But the Culture Secretary's willingness to clear the BSkyB deal provoked intense anger among a section of Labour figures in Parliament yesterday.

In the House of Lords, Lord Prescott attacked Mr Murdoch. "This man, to my mind, is not a fit and proper person to be purchasing such an organisation." He referred to the criminal investigation into phone hacking at the News of the World (published by News Corp's News International arm). "This is the company we are now considering giving control of a major media organisation."

In the Commons, the Labour MP Tom Watson warned of further revelations to come in the hacking scandal. "There is evidence News International conspired with convicted criminals to pervert the course of justice by hacking serving police officers and detectives, their families and the families of the victims of serious crimes," he said.

"At least one senior executive even collaborated with at least one career criminal while he was serving time in prison. And, most appallingly of all, whilst the nation grieved, the criminals who were contracted to News International illicitly targeted the phone of a parent of the children who were murdered by Ian Huntley in Soham. Today, the Secretary of State has chosen to take these people at their word."

The argument over whether Mr Murdoch should be allowed to take complete control of a company that may soon give him £8bn a year, a quarter of the annual revenues of his global media empire, came down to a discussion over the future of a news channel with a tiny, though influential, audience.

The destiny of Sky News became the focal point of the discussion on whether News Corp's acquisition of the satellite broadcaster BSkyB was damaging to the plurality of the British media. For those who were opposed to the deal, that left very little room for manoeuvre. As Martin Moore, director of the Media Standards Trust, said yesterday: "This is like fighting over the inscription on the cup once the game has already been won."

An alliance of media organisations opposed to the deal yesterday released a statement saying that it was "disappointed" by Mr Hunt's decision and that the matter should have gone before the Competition Commission.

Opponents to the deal suffered a setback last December when the European Commission ruled in Brussels that the proposed takeover would not impede competition in the UK market. Days later, they lost their greatest political ally when the Business Minister, Vince Cable, who was convinced of the need to refer the bid to the competition authorities, was taped by newspaper reporters saying he was "declaring war on Murdoch". He was obliged to withdraw from the decision-making process.

Mr Hunt, having taken advice from the media regulator Ofcom and the Office of Fair Trading, said yesterday that he was convinced that the safeguards introduced to protect the integrity of Sky News, including an independent editorial director, were sufficient for him not to refer the deal.

Will Mr Murdoch be upset by having lost Sky News? Hardly. News Corp retains the 39 per cent stake that BSkyB owns in the loss-making channel. The network will continue to be subject to Ofcom rules on impartiality and will continue to be broadcast from BSkyB's west London base. Andrew Neil, founding chairman of Sky, predicted in March that there would not be other future suitors for the channel and that at some point "it will come back" to News Corp.

Almost at the same time as Mr Hunt made his announcement, Rebekah Brooks, chief executive of News International, sent an e-mail to staff telling them job losses are on the way. "There are tough decisions coming. Costs will need to be cut and savings made in overheads and personnel," she warned.

Last night, as his News International operation announced that it had built an audience of 100,000 subscribers for its digital versions of The Times and The Sunday Times, Mr Murdoch was waiting to see how much he will have to pay for complete ownership of BSkyB. In the 12 months since he first bid 700p a share for the company, the share price has risen from 572p to 847.5p. Shareholders will hope for around 875p a share. But with media analysts predicting that BSkyB revenues will rise from £5.7bn last year to £8bn in 2015, it can afford it.

Tom Watson's statement in the commons

"The chief executive of News International, Rebekah Brooks, openly, brazenly, without any sense of irony, admitted to a parliamentary committee that News International paid police officers for evidence.

"You have granted the acquisition to an organisation that is currently the subject of three separate police inquiries, an organisation that a parliamentary select committee found guilty of a selective amnesia when it came to criminality at one of its newspapers.

"There is emerging evidence that News International conspired with convicted criminals to pervert the course of justice by hacking serving police officers and detectives, their families, and the families of victims of serious crime. At least one senior executive even collaborated with at least one career criminal while he was serving time in prison. And most appalling of all, while the nation grieved, the criminals that were contracted to News International illicitly targeted the phone of the parents of the children who were murdered by Ian Huntley in Soham.

"Today you have chosen to take these people at their word. No wonder you tried to avoid answering colleagues in the House this morning."