U.K. Clears Path for Fox to Partake in Bidding War for Sky -- 2nd Update
June 19 2018 - 1:14PM
Dow Jones News
By Stu Woo
LONDON -- The U.K. government has all but given Rupert Murdoch's
21st Century Fox Inc. permission to partake in a bidding war for
British pay-TV giant Sky PLC, clearing one of the last obstacles
for a corporate takeover battle that also includes Walt Disney Co.
and Comcast Corp.
British Culture Secretary Matt Hancock earlier this month
indicated he would approve Fox's $15 billion bid to buy the 61% of
Sky it doesn't already own, on the condition that Fox sell Sky's
news channel if its bid succeeds. On Tuesday, Mr. Hancock said he
approved of Fox's sweetened proposal to sell the channel to Disney,
which itself is trying to buy the majority of Fox.
The British government said that as well as proposing to sell
Sky's news business to Disney, Fox had pledge to fund the operation
for 15 years rather than the 10 years it proposed previously. The
government also said Disney must formally commit to preserve the
news operation's editorial independence, and that it would require
government approval to sell the news business within 15 years.
Formal approval is now expected after a 15-day period for
feedback.
The U.K. government was concerned that Fox's full ownership of
Sky would give Mr. Murdoch and his family too much influence in
British media. Mr. Murdoch and his family are major shareholders in
both Fox and News Corp, which publishes three U.K. newspapers as
well as The Wall Street Journal.
The expected green light from the U.K. sets up a complicated
bidding war for Sky. On one side is Fox and Disney, which has
proposed buying most of Fox -- including its 39% Sky stake -- in a
$52 billion all-stock deal. On the other side is cable giant
Comcast, which in February launched its own $29 billion to buy all
of Sky, offering GBP12.50 ($16.47) a share. That is higher than
Fox's GBP10.75 proposal. In addition, Comcast last week topped
Disney's offer for Fox assets with a roughly $65 billion cash
offer.
Both Disney and Comcast are trying to increase their
international footprints, and both have said they consider Sky one
of Fox's most appealing assets.
Operating in seven European countries, Sky is a smaller version
of what U.S. media companies are trying to become: a
telecommunications providers that also owns the programming that
flows through its airwaves and wires. Sky sells phone, TV and
internet services, and it also produces its own sports,
entertainment and news programming.
The possibility of vertically integrating communications
services with content drove AT&T Inc.'s $85 billion purchase of
Time Warner Inc., and analysts say the recent court approval of
that merger may lead to more deals just like it.
Fox and Sky said in separate statements that they welcomed the
U.K. government's announcement.
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
June 19, 2018 12:59 ET (16:59 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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