Did UK Taxpayers Fund Sky Startup?

Media watchers in the UK could be forgiven for thinking that they had entered some kind of timewarp, after James Murdoch was re-appointed as chairman of Sky, four years after he departed in disgrace. This comes hard on the heels of another re-appointment, that of the twinkle-toed yet domestically combative Rebekah Brooks as CEO of News UK, who was of course found Not Guilty at the Hacking Trial.

But Rupert Murdoch and his minions might not enjoy too much scrutiny falling on their recent past, not after Rupe kicked off at Google’s £130 million tax settlement with HMRC. Although this was as predictable as it was petulant, all that it did was to invoke comparisons with the amounts of tax paid in the UK by Murdoch’s own companies in the recent past - or the distinct lack of it.

As the Independent noted back in 1996, Rupe’s UK interests had made £979 million of profits in the preceding ten years, yet had paid only £11.74 million in tax, that yielding a tax rate of just 1.2% (that of the Google deal is estimated at 2.7%). It got worse: the BBC told three years later that Newscorp Investments, Murdoch’s main UK holding company, had paid no net corporation tax for the previous eleven years.

How did that happen? One has to assume that no law had been broken: not even Creepy Uncle Rupe is immune to the attention of the tax authorities. And we need look no further than the early years of Sky, and later BSkyB, for clues as to why Murdoch could square his tax-free circle. In August 1990, News International, as it was then, reported an annual loss of £257 million. Things did not improve for some years after that.

Guess who's coming back for more dinner?

Why should that be, with papers like the Sun and the now-defunct Screws coining in the money? Well, out of that £257 million loss, Sky lost £95 million in addition to start-up costs of £120 million. Soon after that, Sky “merged” with BSB, although in effect it was a takeover. There were significant costs involved in making the two organisations into one. And then came the big money sports deal of the decade.

BSkyB bid £304 million for live broadcast rights to the then-new FA Premier League. This, too, had to be funded somehow. Fortunately, the tabloids were raking in good profits, and this enabled Murdoch’s broadcasting ambitions to be achieved. But if the organisation overall was losing money, then there were no profits to report. And without profits, there would be no Corporation Tax to pay. Which leads to one conclusion.

UK taxpayers effectively subsidised the Murdoch empire from the late 80s and through the 1990s. Profits from the Sun and Screws went into propping up BSkyB, not into the Exchequer. And now that Sky has a turnover of £7.5 billion, and is generating profit hand over fist, in return those same UK taxpayers are getting … nothing. Nil. Zero. Zilch. Nix. Nada. Bugger all. Except for Rupe to lecture them about paying their taxes.

He gamed the tax system, he’s had our national broadcaster screwed over, he’s sticking two fingers up at his detractors, and now Rupert Murdoch is whinging about tax. What a trouper. What a hypocrite. What a 24 carat shyster.