Murdoch Gets What He Wants Out of Brexit Britain
(Bloomberg Opinion) -- The U.K. government has all but approved Rupert Murdoch's bid to take full control of Sky Plc. That's good news for the satellite broadcaster's shareholders. It's also a sign that even the most controversial foreign offers for British companies have a fighting chance of success.
U.K. Culture Secretary Matt Hancock said Tuesday he will clear the bid by Murdoch's 21st Century Fox Inc. if the company can find a long-term steward for Sky's news operation -- most likely Walt Disney Co., which has already offered to take the unit on.
There's a two-week deadline for hammering out the details. Underwriting Sky News will be expensive. But Disney has a vested interest in helping Fox get over the line here: the U.S. entertainment giant has a separate deal to buy most of Fox's assets, including its 39 percent stake in Sky — which would become a controlling position if Fox's bid for the rest of the shares succeeds.
Meanwhile, Murdoch himself will want to finish the job of buying Sky even though he's selling up to Disney — an insurance policy if for any reason the deal to sell up to Mickey Mouse’s parent falls through.
Sky's shares climbed slightly to 13.54 pounds on Tuesday, a sign investors anticipate a bidding war that will push Fox and rival bidder Comcast Corp. to the pain barrier. Assume Sky absent a deal is worth between 9.50 pounds and 10 pounds a share and the synergies from the deal are worth more than 4 pounds a share, as UBS analysts reckon, and the current stock price makes sense. The main risk to an auction now is that Fox teams up with Comcast — which also covets Murdoch’s assets — and Disney decides not to bid for Sky either.
It's been a long slog for Murdoch. The goal has always been to make this battle about financial power only. That point has nearly arrived. Nearly. Disney needs to convince Hancock it will be a committed owner of Sky News even if its deal for the Fox assets fails, leaving it with a U.K. News operation it would never have bid for otherwise.
As for other overseas bidders, the British government is taking care to be seen to scrutinize high-profile deals thoroughly while also laying out achievable hurdles to let them proceed. Even in the current fraught political climate, both foreign and hostile deals aren't impossible.
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