Despite the brouhaha swirling around British Sky Broadcasting (BSY), we are maintaining our fair value estimate. BSkyB's stock has dropped sharply over the past week on concerns that the News Corp. (NWS) deal will be killed. The deal has been pending final approval from Jeremy Hunt, the Culture Secretary, for months. In response to his initial assertion that he was "minded" to approve the deal, he has received approximately 40,000 comments from concerned parties. On top of that, the wiretapping scandal at News of the World, one of Rupert Murdoch's four U.K. newspapers, hit a climax last week with Murdoch shutting the paper down. On Monday, Hunt asked Ofcom, the telecom and media regulator, and the Office of Fair Trading whether their opinion that the spin-off of Sky News was sufficient to meet media plurality issues had changed in the wake of the News scandal. While these happenings have spooked many of the speculators that had bid BSkyB's stock price up since the original offer was rejected, we think approval will ultimately be granted.
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