Murdoch's Sky Deal to Get Approval, Setting Up Comcast Fight
(Bloomberg) -- Rupert Murdoch, the 87-year-old media baron looking to cap off a career of global gamesmanship, just scored another victory.
The U.K. plans to approve a proposal by Murdoch’s 21st Century Fox Inc. to acquire Sky Plc, the largest pay-TV provider in the country. The move gives Fox the clearance it needs to continue pursuing the transaction -- but it’s no done deal. Comcast Corp. has submitted a higher bid for Sky, and U.K. authorities want to ensure that Fox divests the Sky News business if it completes the takeover.
The decision gives fresh life to Murdoch’s second attempt to buy Sky, part of a transatlantic battle for media assets that includes Walt Disney Co. and Comcast. Fox is trying to acquire the 61 percent of Sky it doesn’t already own, while also fending off the Comcast bid. The U.S. cable giant has made an offer that’s 16 percent higher, but Fox now has the OK to increase its bid of 11.7 billion pounds ($15.6 billion).
Further complicating matters: Murdoch plans to sell Sky to Disney as part of a $52 billion sale of Fox’s entertainment assets, which Comcast also may try to acquire.
Matt Hancock, U.K.’s secretary of state for culture, media and sports, gave approval for Fox to proceed on Tuesday, provided the U.S. company sells Sky News. With the Disney deal looming, Fox has already proposed divesting the Sky news operation to Disney, a first step toward Disney acquiring most of the media giant.
Hancock said that he agreed with the Competition & Markets Authority that divesting Sky News to Disney or another suitable buyer -- with a deal that would see the operations funded for at least 10 years -- “is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified.”
Hancock also has confirmed that he intends to allow Comcast’s bid for Sky to go ahead. That scenario doesn’t trigger public-interest concerns that would require government intervention. Fox’s pursuit has been held up over concerns that it would give Murdoch, who also owns U.K. newspapers, too much influence over British media.
Threat of Rejection
In a provisional ruling in January, U.K. regulators said the Fox-Sky deal should be blocked. Fox has since offered remedies to address those concerns, such as the Sky News provision. On Tuesday, Hancock announced a 15-day consultation on the divestment of Sky News to assess the matter.
Hancock told Parliament that if a divestment of Sky News can’t be agreed upon, the only effective remedy would be to block the merger of Fox and Sky altogether.
Sky shares have been trading above both bids, a sign investors anticipate a higher price from the suitors. The stock rose 0.3 percent to 13.54 pounds at 3:30 p.m. in London on Tuesday.
Shares of Fox rose 0.4 percent to $38.81 in New York, while Disney was little changed at $100.14.
Fox said it welcomed Hancock’s announcement and already submitted proposals to sell Sky News to Disney.
“We now look forward to engaging with the Department for Culture, Media and Sport, and we are confident that we will reach a final decision clearing our transaction,” the New York-based company said in a statement.
Disney, meanwhile, said it was “ready to engage in any discussions requested by the secretary of state with respect to our undertakings.”
Murdoch’s separate deal with Disney was hammered out in December. It would offload Fox’s film and TV studios, as well as cable channels such as FX and National Geographic, in an all-stock deal. But that transaction is also still very much in flux: Comcast confirmed last month that it was interested in outbidding Disney for the Fox operations.
©2018 Bloomberg L.P.