Statement Regarding Proposal

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF

SUCH JURISDICTION

For Immediate Release

British Sky Broadcasting Group plc ("BSkyB" or the "Company")

Statement Regarding Proposal from News Corporation

15 June 2010

The Independent Directors of BSkyB refer to the announcement by News Corporation of a proposal from News Corporation relating to a possible offer for the entire issued share capital of BSkyB not already owned by News Corporation ("the Proposal").

The Proposal, which is not a formal offer, is subject to regulatory and financing pre-conditions, which add considerable uncertainty to when and whether any formal offer could be made.

The Independent Directors, who have been so advised by Morgan Stanley and UBS Investment Bank, unanimously consider the terms of the Proposal to undervalue significantly BSkyB and they would not recommend an offer if it were made at 700 pence per share today, the price indicated in the Proposal. In providing advice to the Independent Directors, Morgan Stanley and UBS Investment Bank have taken into account the commercial assessments of the Independent Directors.

The Independent Directors, who have been so advised by Morgan Stanley and UBS Investment Bank, have indicated to News Corporation that, based on facts and circumstances today, they would have been prepared to support a proposal if, upon satisfaction of the regulatory pre-conditions, it would deliver value in excess of 800 pence per share. Given the views of the Independent Directors as to, among other things, the possible length of time which might be required to satisfy the regulatory pre-conditions and the consequent lack of certainty as to when any offer would be made, the Independent Directors reserve: (i) the right to recommend an offer at a price of 800 pence per share or lower, including in the event that the regulatory pre-conditions are satisfied or waived in a shorter period of time; and (ii) the right to choose not to recommend an offer at above 800 pence per share. In providing advice to the Independent Directors, Morgan Stanley and UBS Investment Bank have taken into account the commercial assessments of the Independent Directors. In reaching this decision the Independent Directors considered the matter mindful of their duty to maximise value for all shareholders.

The Independent Directors note that News Corporation has confirmed that the Proposal does not amount to a firm intention to make an offer under Rule 2.5 of the Takeover Code and that there can be no certainty that any offer will ultimately be made even if the pre-conditions are satisfied or waived. There is no obligation on News Corporation to make such an offer and therefore it can withdraw the Proposal at its sole discretion at any time.

Recognising that an offer from News Corporation could be in the interests of BSkyB shareholders in the future, and that obtaining any necessary merger clearances would facilitate such an offer, BSkyB has agreed to co-operate with News Corporation in seeking those clearances from the relevant authorities.

To that end, BSkyB and News Corporation have entered into an agreement which also covers the following matters:

·; BSkyB has agreed that it shall not request that the Takeover Panel issue a "Put up or shut up" notice on News Corporation pursuant to Rule 2.4(b) of the City Code on Takeovers and Mergers unless it is in material breach of the agreement.

·; News Corporation has agreed that until two months following the earlier of receipt of merger clearance, payment of the £38.5 million fee below and 31 December 2011, it shall not acquire or offer to acquire an interest in BSkyB's shares or take action that would require it to make a takeover or similar transaction in respect of BSkyB's shares without the consent of the Independent Directors. Further, until five months following the earlier of receipt of merger clearance, payment of the £38.5 million fee below and 31 December 2011, any offer must be subject to a minimum acceptance threshold of 70 per cent (including the shares owned by News Corporation).

·; If merger clearance is not granted or granted subject to a material remedy, then News Corporation will reimburse BSkyB for costs incurred up to a maximum of £20 million. Further, if News Corporation either receives merger clearance unconditionally or subject to non-material remedies prior to 31 December 2011 and fails to make a firm offer within five months thereafter, or announces prior to obtaining merger clearance that it does not intend to make a firm offer, then News Corporation will pay BSkyB a fee of £38.5 million, representing 0.5% of the value of the Proposal.

The Board has passed a resolution to appoint a committee comprising the Independent Directors and the Executive Directors with authority to exercise all powers of the Board in relation to the possible offer and any matters relevant to the Proposal.

These Directors, who constitute a majority of the Board of BSkyB, intend to exercise their rights and powers to manage the governance of the Board during this period in the best interests of all shareholders. This will include taking such steps within their power as they consider appropriate to regulate the attendance of Directors connected with News Corporation at meetings of the Board (or any committee of the Board) and receipt of information relating to the Company by those Directors that are deemed relevant to the Proposal. These arrangements will continue for the duration of the Proposal or until the successful completion of any transaction contemplated by the Proposal.

In recognition of the above it has been agreed by the Board that Nicholas Ferguson, the Senior Independent Non-Executive Director, will be appointed as Deputy Chairman of the Board.

Commenting on the Proposal, Nicholas Ferguson, BSkyB's Senior Independent Non-Executive Director, said:

"The eight Independent Directors have evaluated the proposal since receiving News Corporation's approach on 10 June. Based on careful review and advice, it is the unanimous view of the Independent Directors that there is a significant gap between the proposal from News Corporation and the value of the company. We believe the company has a track record of very strong performance and excellent growth prospects. The management team will remain fully focused on its strategic and operational priorities, positioning the Company well to grow earnings and cash and increase returns for shareholders. The Independent Directors remain fully committed to acting in the interests of all shareholders and will continue to meet on a regular basis."

Morgan Stanley & Co. Limited ("Morgan Stanley") and UBS Investment Bank are acting as joint financial advisers to BSkyB. Merrill Lynch and an affiliate of Morgan Stanley, Morgan Stanley & Co. International plc, are acting as joint corporate brokers and Merrill Lynch is also providing certain financial advice to BSkyB.

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Note to editors:

The Independent Directors of BSkyB are:

Nicholas Ferguson, Senior Independent Non-Executive Director

Nicholas Ferguson was appointed as a Director of the Company on 15 June 2004 and Senior Independent Non-Executive Director on 12 June 2007. Nicholas is Chairman of SVG Capital plc, a publicly quoted private equity group, and was formerly Chairman of Schroder Ventures.

David Evans

David Evans was appointed as a Director of the Company on 21 September 2001. David was previously President and CEO of Crown Media Holdings, Inc. and its predecessor company, Hallmark Entertainment Networks, from 1 March 1999. Prior to that, David was President and CEO of Tele-Communications International, Inc. from January 1998. David is a Director of Village Roadshow Ltd in Australia and a Director of Village Roadshow Entertainment Group and Concord Music in Los Angeles.

Andrew Higginson

Andrew Higginson was appointed as a Director of the Company on 1 September 2004. Andrew is Chief Executive of Retailing Services and Group Strategy Director of Tesco plc (Tesco). Andrew was appointed to the Board of Tesco in 1997, having previously been the Group Finance Director of the Burton Group plc.

Allan Leighton

Allan Leighton was appointed as a Director of the Company on 15 October 1999. Allan joined ASDA Stores Limited as Group Marketing Director in March 1992 and was appointed CEO in September 1996. In November 1999 he was appointed President and CEO of Wal-Mart Europe. Allan resigned from all of these positions in September 2000. Allan is currently Deputy Chairman of Selfridges & Co Ltd., George Weston Limited and Loblaws Companies Limited. Allan was Chairman of Bhs Limited until January 2008 and Chairman of The Royal Mail Group until March 2009.

Jacques Nasser

Jacques Nasser was appointed as a Director of the Company on 8 November 2002. Jacques served as a Member of the Board of Directors, and as President and CEO of Ford Motor Company from 1998 to 2001. Jacques is the Chairman of BHP Billiton and a Partner of One Equity Partners, the private equity arm of JP Morgan.

Dame Gail Rebuck

Dame Gail Rebuck was appointed as a Director of the Company on 8 November 2002. Gail is Chairman and CEO of The Random House Group Limited, one of the UK's leading trade publishing companies.

Daniel Rimer

Daniel Rimer was appointed as a Director of the Company on 7 April 2008. Daniel is a General Partner of the venture capital firm Index Ventures Management Limited (Index Ventures) and established the firm's London office. He currently serves on a number of boards including RightScale Inc., Oanda Corporation, FON Wireless Limited, Stardoll Inc. and Viagogo Limited.

Lord Wilson of Dinton

Richard Wilson was appointed as a Director of the Company on 13 February 2003. Richard retired from the Civil Service in 2002 after serving 36 years in a number of UK Government departments. Since his retirement in September 2002, Richard has been Master of Emmanuel College, Cambridge. In October 2006, he became Non-Executive Chairman of C. Hoare and Co, Bankers.

Enquiries:

British Sky Broadcasting Group plc

Investors:

Francesca Pierce Tel: 020 7705 3337

Media:

Robert Fraser Tel: 020 7705 3706

Finsbury

Roland Rudd Tel: 020 7251 3801

Katie Lang Tel: 020 7251 3801

Morgan Stanley & Co. Limited (Financial Advisor):

Simon Robey / Scott Matlock / Laurence Hopkins Tel: 020 7425 8000

Morgan Stanley & Co. International plc (Joint Corporate Broker):

Paul Baker Tel: 020 7425 8000

UBS Investment Bank (Financial Advisor)

Simon Warshaw / Jonathan Rowley / Christian Lesueur Tel: 020 7568 1000

Bank of America Merrill Lynch (Joint Corporate Broker)

Mark Astaire Tel: 020 7628 1000

Andrew Tusa Tel: 020 7628 1000

Morgan Stanley & Co. Limited and Morgan Stanley & Co. International plc are acting as financial adviser and joint corporate broker, respectively, to BSkyB in relation to the Proposal and no-one else and will not be responsible to anyone other than BSkyB for providing the protections offered to clients of Morgan Stanley & Co. Limited and Morgan Stanley & Co. International plc or for providing advice in relation to the Proposal or the contents of this announcement or any transaction, arrangement or other matter referred to herein. 

UBS Investment Bank is acting as financial adviser to BSkyB in relation to the Proposal and no-one else and will not be responsible to anyone other than BSkyB for providing the protections offered to clients of UBS Investment Bank or for providing advice in relation to the Proposal or the contents of this announcement or any transaction, arrangement or other matter referred to herein. 

Bank of America Merrill Lynch is acting as joint corporate broker to BSkyB and no-one else and will not be responsible to anyone other than BSkyB for providing the protections offered to clients of Bank of America Merrill Lynch or for providing advice in relation to the Proposal or the contents of this announcement or any transaction, arrangement or other matter referred to herein.

None of Morgan Stanley & Co. Limited, Morgan Stanley & Co. International plc, UBS Investment Bank and Bank of America Merrill Lynch accepts any responsibility or liability for the contents of this announcement to anyone other than BSkyB. Each of Morgan Stanley & Co. Limited, Morgan Stanley & Co. International plc, UBS Investment Bank and Bank of America Merrill Lynch accordingly disclaims all and any responsibility or liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this announcement.

Dealing disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of BSkyB or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) BSkyB and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of BSkyB or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of BSkyB or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of BSkyB or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) BSkyB and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of BSkyB or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by BSkyB and by any offeror and Dealing Disclosures must also be made by BSkyB, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Publication of this announcement

A copy of this announcement will be available subject to certain restrictions relating to persons resident in restricted jurisdictions on BSkyB's website.

Relevant securities in issue

In accordance with Rule 2.10 of the Code, BSkyB confirms that it has the following class of relevant securities in issue: