What James and Rupert Murdoch really wanted to do with BSkyB Although drowned out by the media frenzy caused by the release of a series of emails that could ultimately lead to the resignation of Jeremy Hunt, Secretary of State for Culture, Media and Sport, James detailed what News Corp had planned to do with the broadcaster had it been successful. Contained within the hundreds and hundreds of pages of witness statements and evidence bundles laid before the Inquiry is the blueprint for what News Corp intended to - and may yet in the future - do with BSkyB. As the broadcaster prepares to publish its third-quarter results, which are expected to remain strong, despite the growing economic malaise, the insights reflect that James's greatest prize - the one that got away - remains just as crucial to the development of News Corp as it did when the bid was first tabled in June 2010. Although both James and his father have in the past said it was only in 2009 when News Corp's board first began to discuss a tilt at BSkyB, Murdoch Junior admitted last Tuesday it was far earlier. During questioning from Robert Jay QC, counsel to the Leveson Inquiry, James admitted that the acquisition of the broadcaster "had long been an aspiration," as far back as the merger with British Satellite Broadcasting in 1990, a merger which sowed the seeds for the BSkyB that exists today. "It had been more than on the radar," James continued. "In late 2009, [was] when we started to really have proper discussions about it... in 2007, the company acquired Dow Jones for $5.5bn [£3.4bn] in cash, and to contemplate a transaction of this size in the immediate aftermath of that, and given what happened in 2008 and 2009 with respect to the global financial crisis, would have been difficult," he explained. So in 2009 and 2010, we realised this was something that we could actually do. On the question of timing, James admitted the News Corp board first really started taking seriously considering making an approach in the summer of 2009, almost a year before it made its move in June 2010. I remember there was a meeting in the summer time about it in Los Angeles, in sort of August, but that was sort of where it was... starting to come together. Thinking, 'would it be possible to do that?,"" James said. He went on to tell the inquiry that the formal approach to BSkyB's board - of which he was, at the time, chairman - did not come until the summer of 2010, in part to "avoid [it] becoming a political issue in the middle of an election." But more importantly, he suggested, was the ability to be able to afford to fund an all-cash offer, and to make the offer ahead of an annual summer get-together of the independent BSkyB directors to discuss long-term strategy. So sensitive was News Corp's tilt for the British broadcaster that on company documents a codeword was used to refer to its approach. It was referenced only twice during the three cumulative days of questioning of James and Rupert. It emerged in an email from Fred Michel, one of News Corp's European lobbyists, to James. It read: "Was told today by Cable's adviser to approach any meeting with Lord Oakeshott as a proxy for Vince Cable, an intro discussion on the substance of Rubicon..." Project Rubicon was the internal codename, presumably a reference to the idiom "Crossing the Rubicon," meaning to pass a point of no return. This was perhaps fitting, given exactly what James had planned for BSkyB once News Corp had taken full ownership. Buried within his 36-page witness statement - which was not read out at the inquiry - James admits the extent of his global ambition. Whereas much of the debate - certainly the political and regulatory debate that followed the initial approach - has centred on BSkyB as a British and Irish broadcaster, James hoped to turn it into something much more. In section 3.2, he explains: "It was intended to consolidate BSkyB with our interests in the other Sky businesses around the world to create the first state-of-the-art, global, 21st century digital pay-television business, which would have been centred in the UK." In the testimony, he went on to explain the motivation behind the deal, which was two-fold, for the parent company and for the broadcaster itself. For News Corp, he explained that its aim was to simplify its model "and to focus on cash flow and invest in upstream content and creative industries." For the broadcaster, he explained that competition was set to increase on an international scale, and News Corp's aim of combining its various Sky businesses into one would allow it to compete "more effectively" with rival multinationals. He went on to specify exactly how this global broadcasting giant might come together: "We had hoped to combine our interests in the Sky businesses in the UK, Italy, Germany, India and New Zealand to build a world-class company, with its headquarters in the UK. We felt it would be helpful to be bigger in order to compete with other international companies such as Google, Apple and large telecom companies, all of whom are much larger than BSkyB and have been investing in the audio-visual business heavily on a global, rather than a national, basis. From Murdoch's perspective, he increasingly viewed Sky's major rivals as international products such as Apple TV and Google TV, rather than domestic pay-television competitors, unfortunately British regulators did not see the proposed consolidation in the same light. As well as benefiting News Corp, he felt there was much to benefit the UK from this. As is highlighted in an email from Michel to his then boss Matthew Anderson, News Corp's group strategy director, Murdoch tried to get this message across to Vince Cable, Secretary of State for Business, during a telephone call on June 15, 2010 - the day after the bid was launched . JRM [James] told him re size of our group in the UK jobs, growth. Cable appreciated. Five months later, after Cable chose to refer the bid to media regulator Ofcom on plurality grounds, James went a step further, using the Barcelona speech to issue a veiled threat that News Corp could easily move its UK operations to countries such as India, Italy or Germany, which were "becoming more welcoming of investment." That same conference, however, saw James speak about the strength of pay-TV and refer to News Corp's Asia businesses - such as Star TV - as being where the "real money" is. At the conference, organised by Morgan Stanley, he was asked about rumours of a possible pay-TV acquisition in Turkey, which he didn't deny, commenting that News Corp "really like[s] Turkey." In April 2010, two months before the BSkyB bid, News Corp asked India's Foreign Investment Promotion Board for permission to increase its stake in Tata Sky, its Indian joint-venture with Tata. Star India, the News Corp vehicle that owned the 20pc stake, asked to raise the investment to 29.8pc, increasing its exposure to one of the world's fastest-growing economies. But it was not just India and Turkey that were attractive to building a global pay-TV player. Sources indicate that once the BSkyB acquisition had bedded in, future areas of interest for Sky's pay-TV dominance could have included parts of Latin America and the Middle East as well as other parts of central Asia. Since the bid, BSkyB has increased its geographic footprint with the soon-to-launch Sky News Arabia, a joint venture with the Abu Dhabi Media Investment Corporation. But it has also strengthened its digital offering, buying The Cloud in late January 2011, giving it ownership of more than 5,000 public Wi-Fi spots across the UK, to allow its customers greater access to services when on the move. One of the key pushes going forward will be BSkyB's penetration into the HD market - buoyed by its Formula One and Premier League football rights - as well as increasing potential for new digital developments. Those two points - geography and digital - were the key reasons the Murdochs wanted full control of BSkyB. For shareholders of News Corp, despite the closure of the profitable News of the World and the continuing inquiries surrounding current and former journalists from News Group Newspapers, the greatest cost of the phone-hacking scandal has been that the company had to abandon its deal to buy the rest of BSkyB. The pay-television business is the area of expertise of Chase Carey, News Corp's chief operating officer and the man many investors would like to take over from Rupert Murdoch. The company's US cable television networks, which are behind Fox News and FX, a popular entertainment channel, helped generate much of the $1.06bn in profits News Corp made in the final three months of 2011. It has also intensified the criticism in the US of News Corp's corporate governance. Given the Murdoch family's control of almost 40pc of the voting rights, News Corp was a target for criticism of corporate governance organisations and some shareholders before the phone-hacking scandal. Last week, the Local Authority Pension Fund Forum (LAPFF), members of which control £100bn of investments, said it was planning to back a motion already filed by US shareholder group Christian Brothers Investment Services to seek a vote at News Corp's annual meeting in October to appoint an independent chairman. It is a role that Rupert Murdoch currently holds, along with that of chief executive. Although News Corp's founder was comfortably re-elected to the board at October's tumultuous annual shareholder meeting in Los Angeles, James, his brother Lachlan, and three other board directors were not. Excluding the Murdoch stake, 67pc of shareholders owning the B shares that carry voting rights objected to the re-election of James, while 64pc voted against Lachlan. The majority of News Corp's major institutional shareholders have stayed silent on the phone-hacking scandal. But, in the same way that it has fed long-standing criticism of News Corp's corporate governance, it has also deepened some investors" appetite to see Murdoch get rid of the newspaper division altogether. Invesco, one of News Corp's biggest investors, told the Telegraph last year that the papers should be sold. Analysts at Alliance Bernstein said last week of the publishing business that it "deserves a low multiple partly because we forecast no growth going forward." Rupert last week told the Leveson Inquiry he knew investors wanted them sold. Shareholders have been told, however, there will be no major acquisitions like the $5bn acquisition in 2007 of Dow Jones, publisher of The Wall Street Journal, or the $580m Rupert paid for social networking site MySpace in 2005. Investors would prefer to see News Corp use the money to increase its $5bn share buy-back programme. Or, perhaps eventually, make another bid for the elusive 61pc of BSkyB it does not own.