Sky Hearing on Same Day as Fox Vote Complicates Comcast Bid

(Bloomberg) -- Friday, July 27, is shaping up to be a big day in the battle between Comcast Corp. and Walt Disney Co. for control of most of Rupert Murdoch’s media empire -- on both sides of the Atlantic.

In the U.S., 21st Century Fox Inc.’s shareholders are set to vote on Disney’s $71 billion bid for the company on that day. Coincidentally, U.K. officials are due to review the value of a key pawn in the three-dimensional game of M&A chess -- Fox’s 39 percent stake in British pay-TV company Sky Plc.

Comcast, the largest U.S. cable provider, has made its own offer for Fox in a bidding war with Disney. And the overall cost of acquiring those assets -- including Fox’s movie and TV production house and pay-TV channels like FX and National Geographic -- could vary depending on the U.K. Takeover Panel’s ruling on Sky.

The panel has the power to force Comcast or Disney to bid for all of Sky at the price ascribed to the Sky stake during the Fox acquisition, a factor that could add billions of dollars to either offer.

How the Takeover Panel calculates that price matters. Comcast has made a separate offer for Sky, valued at 14.75 pounds a share. As the U.S. company is weighing whether to boost its $65 billion bid for Fox, it needs to know how much higher it could go for the Fox bundle without also triggering a higher bid for all of Sky.

The panel recently said Disney’s $71 billion Fox offer would require a Sky bid at 14 pounds per share, and the hearing next Friday is to review that decision after Sky appealed. In a filing Wednesday, Disney acknowledged the upcoming decision and said every 1-pound increase in the offer price for Sky shares would represent about $1.5 billion of extra debt and $60 million of interest costs a year.

The timing of the hearing is unfortunate for Comcast Chief Executive Officer Brian Roberts, who needs to decide before the Fox shareholders’ vote whether to make a counteroffer for Fox.

Comcast declined to comment, as did the Takeover Panel.

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