Disney Spells It Out: Fox Might Not Increase Its Bid for Sky

(Bloomberg) -- For the first time, Walt Disney Co. spelled out for investors that 21st Century Fox Inc. may choose not to increase its takeover offer for British broadcaster Sky Plc.

The revelation boosted speculation that Disney and Comcast Corp. may carve up Rupert Murdoch’s media empire, with Comcast possibly taking control of U.K. pay-TV operator Sky while Disney acquires Fox’s media assets.

“There’s a perfectly logical scenario where Disney gets Fox and now Comcast gets Sky, simply because the consequences of paying a huge amount for companies are very unpleasant,” said Claire Enders, founder of media research firm Enders Analysis, by phone.

Sky is at the center of an international bidding war that involves Fox, Disney and cable giant Comcast, and everyone’s anxiously awaiting the next twist in the saga.

Disney and Comcast have been battling for the bulk of Fox’s assets, which includes its 39 percent stake in Sky. Meanwhile, Fox and Comcast have both been vying for full ownership of Sky. Last week, Comcast increased its offer for Sky to 26 billion pounds ($34 billion), topping Fox’s bid. Disney has the highest offer on the table for most of Fox, after raising its offer for Fox’s entertainment assets to $71.3 billion on June 20.

With a filing from Disney on Friday, Fox’s further pursuit of Sky now looks less likely. Fox “may elect not to increase the price offered by it in the Sky acquisition and any increase in the debt financing for the Sky acquisition would require Disney’s consent, which Disney may elect not to provide,” Disney said in the filing.

While Fox has yet to top Comcast’s bid for Sky, Comcast hasn’t responded after almost a month to Disney’s superior offer for Fox, which is scheduled to go to a Fox shareholder vote on July 27.

Letting Comcast acquire Sky may be a blessing for Disney, since it wouldn’t have to borrow as much money to complete the Fox deal. Sanford C. Bernstein & Co.’s Todd Juenger and other analysts have raised concerns that a Sky bidding war would saddle Disney with too much debt.

©2018 Bloomberg L.P.