Disney and Fox Can Keep Comcast Guessing With Sky Maneuver

(Bloomberg) -- Comcast Corp.’s $34 billion bid for Sky Plc is putting pressure on 21st Century Fox Inc. to make a higher offer for the U.K. pay-TV provider. But Fox and its partner, Walt Disney Co., have a way to keep their options open while staying in the hunt for Sky a while longer.

Fox, which is selling its 39 percent Sky stake to Disney, has to officially make its 14-pound-a share offer to other investors in the U.K. company by Thursday. But it can submit the paperwork without topping Comcast’s 14.75 pound-a-share bid, setting off a 46-day bidding period under U.K. law.

The companies are strongly considering the option, which would give Fox and Disney more time to consider whether to raise their bid, according to people familiar with the matter. The move would ultimately make the U.K.’s takeover panel the arbiter of a bidding war. If neither side folds after 46 days, the agency could announce an auction that requires final bids from the companies.

Fox and Disney could also decide not to formalize the offer by the deadline, allowing Comcast to proceed with the acquisition of Sky.

Investors are waiting for a peek into the strategy over the next two days, when both Disney and Fox report their quarterly earnings. Disney’s results come after the bell on Tuesday, while Fox is delivering its numbers on Wednesday afternoon.

Entertainment Megadeal

Fox shareholders approved a $71 billion deal with Disney last month, setting the stage for a huge swath of media assets to change hands, including 20th Century Fox, a stake in Hulu and cable networks such as FX. Disney also would get Fox’s current 39 percent stake in Sky -- and a shot at acquiring the rest of that business.

Analysts have speculated that Burbank, California-based Disney could agree to a deal with Comcast that might involve swapping portions of Hulu and Sky and potentially renegotiate distribution rights over Disney and Fox content with the British broadcaster.

As it formalizes its bid, Fox may need to switch the structure from a scheme of arrangement, which requires 75 percent approval, to an offer that requires only 50 percent.

©2018 Bloomberg L.P.