Rupert Murdoch-owned News Corp. (Nasdaq: NWS) has received British approval to buy British Sky Broadcasting (BSkyB) -- a deal that is likely to rake up the politically sensitive issue of media ownership in the U.K.

Although News Corp. has agreed to spin off its loss-making Sky News business to settle antitrust concerns, media watchdogs say News Corp. would still be left with too much influence over British media. News Corp. already owns major British newspapers such as The Sun, The Times of London and News of the World. Although News Corp. would retain a 39% stake in Sky News, the sale would help it get hold of the remaining 61% of BSkyB that it does not already own -- and strengthen its position in the British media industry.

The dominance of the Murdoch empire
A single American company taking over a significant proportion of the British media industry does look like a major concern. News Corp. already owns about a third of the newspaper market in Britain, and many aver this deal would allow News Corp. a free run in Britain.

Other interested parties in media are already seeing red, with the British media regulator Ofcom suggesting the move may not be in favor of the public interest. British media voices such as Daily Telegraph, Guardian, and Daily Mirror appear concerned and say such a move would distort competition. Trinity Mirror and the Telegraph Media Group term the deal a "whitewash" and have not ruled out seeking legal recourse. They fear the deal would subdue the British media industry and ultimately kill competition.

About a month ago, Murdoch, with help from Steve Jobs and his Apple (Nasdaq: AAPL) team, revolutionized the newspaper industry with the digital newspaper "The Daily." This move was criticized by some who see it as jeopardizing the traditional press.

Apple had spent almost a year in talks with some irate publishers regarding the sales of The Daily and its effect on their own publications. To make readers pay for online news, Murdoch removed all content from Google (Nasdaq: GOOG) and introduced online pay walls at some of its publications. But with news sources flooded over the Internet, would people really pay for an online newspaper?

Murdoch's adamancy may raise hurdles
Murdoch's unwavering keenness to secure the deal has forced him to make higher bids, which is not much of a setback for the empire. In fact, Murdoch looks impossible to stop in his quest to expand his already vast media empire.

News Corp. seems to be using its control and influence to dwarf its rivals, and that strategy is having a significant effect on the performance of the stock, at least compared to other companies in the media/newspaper industry. While News Corp.'s stock has held the line against the S&P 500 over the last five years, shares of newspaper giants such as New York Times Co. (NYSE: NYT) and Washington Post Co. (NYSE: WPO) have gotten crushed. Clearly, Murdoch is doing something right.

The Foolish bottom line
When playing such an aggressive game of consolidation and domination, beware the backlash of the public and the regulative bodies that are designed to protect the public. Murdoch's omnipotence in mass media is giving the British media industry nightmares and raising questions about democracy of the press. The idea of one company (or to be precise, one man) controlling the world of media sounds like something the British government will want to have a say in. Shareholders may want to beware. Stay tuned for big stories surrounding this company.

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