When the Murdoch family controlled News Corporation launched its £12.3bn bid for the 60 per cent of BSkyB, which it does not own, in June, what a storm it unleashed.
The deal, orchestrated by James Murdoch, who runs News Corp in Europe and is non-executive chairman of BSkyB, was poorly executed and prepared.
First, the price of 700 pence offered was inadequate and galvanised the normally-docile independent directors on BSkyB into action. Secondly, it raised questions of conflict of interest because of James Murdoch's role at News Corp and his job as chairman of BSkyB.
Finally, it enraged media competitors (including the BBC) which feared that full control of BSkyB would further dominate the Murdoch family's share of Britain's broadcast and print media where it already has an estimated 37 per cent stake. It was not helpful either to the Murdoch cause that during May's election campaign his popular titles, including the Sun, campaigned relentlessly against the LibDems - now part of the government.
The younger Murdoch's first error - seeking to underpay for a company which has become a profit machine spewing out £1bn of earnings a year - would never have been made by his father Rupert. The elder Murdoch long ago recognised the lure of cash and by overpaying managed to buy assets such as the Dow Jones Company (owners of the Wall Street Journal) which it had been assumed were not for sale.
James Murdoch's perceived low-ball offer allowed opponents, both within BSkyB and commercial competitors, to lobby against the deal. Murdoch had also wrongly assumed that some of the independent directors on the board, notably former Royal Mail chairman Allan Leighton, would be biddable.
Instead, it was Leighton who led a revolt among the non-executives demanding that James Murdoch should step aside because of his conflict of interest. Leighton's revolt was enough to convince the senior non-executive Nicholas Ferguson of Schroders Venture Capital to reject the 700 pence offer and demand that the younger Murdoch recuse himself from any further discussion on the offer.
While the internal wranglings over governance and price continued over the summer, a far greater threat loomed. In the past, rival media groups have been relatively sanguine about News Corps increasing interests in Britain. But the strength of Sky, which now has more than 10m subscribers, and the blurring of the lines between broadcast, print and on-line media means that rivals felt bound to intervene. The result was an unusual alliance between the BBC, the Guardian Media Group, and Daily Mail and General Trust (GMG), publishers of the Daily Mail, joining together to lobby against the deal.
Speaking in the House of Lords in a debate on the transaction Lord Gavron, former chairman of GMG observed: "The potential influence of News Corporation in the UK is enormous. The damage that would be done if it fell into the wrong hands is incalculable. I feel we should be extremely worried."
The Murdoch family has never been scared to use its interests as a political force. In the US, Fox News became the house channel of the Tea Party during the recent mid-term elections. Here in Britain, when the Sun turned against Labour, so did the country.
However, an enduring feature of News Corp's outlets has been their willingness to give Israel a fair hearing during a period of demonisation in much of the media.
James Murdoch now faces formidable obstacles. Business Secretary Vince Cable referred the News Corp offer to Ofcom for a review as soon as it notified the European Union of its intentions.
Media regulator Ofcom is looking at the bid in terms of plurality of ownership and public interest. If will finish its review by December 31. But if it thinks there is a case to be answered it can refer the matter to the Competition Commission (CC). The CC cannot be underestimated and has a habit of demanding powerful remedies to avoid market domination.
Even if the regulatory barriers are overcome, James Murdoch will still have to raise the price of his offer. Minority investors view £8-£9 per share seen as the starting point.
