Government Clearance Given for Rupert Murdoch’s Fox to Bid for Sky

Darnell Taylor
July 16, 2018

Comcast, which increased its cash offer to 14.75 pounds per share on Wednesday, said Sky's independent committee of directors have recommended its cash offer.

Comcast (CMCSA.O) expects to pay the banks, law firms and other advisers on its 25.9 billion pound bid for Sky (SKYB.L) as much as 243 million pounds if it wins the battle for the British broadcaster, the US cable giant said on Friday. Second, if Disney wants to make sure Comcast only walks away with Sky, pushing the bid higher for the United Kingdom pay-TV company may be a defensive move to protect the remainder of the Fox assets.

Fox investors vote on Disney's US$71-billion bid on July 27. This means it would probably poses a real challenge to Netflix, given Disney's rich content portfolio.

If Disney's purchase of Fox assets, including Fox's current 39% stake in Sky, closes before any separate deal for the pay-TV firm, Disney would be obliged under United Kingdom rules to make an offer for the remainder of Sky within 28 days.

And Fox, which is working in concert with Disney, similarly has an incentive to bid again on Sky for two reasons.

Netflix isn't going anywhere regardless of what Disney does, but if Disney is successful in acquiring the assets from 21st Century Fox, it will definitely be in a ideal spot to challenge them as a top platform.

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Sky gives Comcast an opportunity to expand beyond the US and reach more consumers directly. United States regulators have said the deal can go through as long as Iger sells Fox's 22 regional sports networks. In the U.S., Comcast rose 2.3 percent to $34.55 and Fox fell 0.9 percent to $47.38.

And earlier this year, Disney created a direct-to-consumer and worldwide unit. So would Comcast only get a controlling stake or would Fox be forced to sell their current shares to Comcast?

Long-term goals: Murdoch is keeping news and major live sports assets seen as less vulnerable to online ads and streaming. Comcast expects to complete the acquisition before the end of October 2018. Analysts see the appeal as a sign that Delrahim will challenge Comcast's bid to acquire the Fox assets as well, since it too represents a telecom giant acquiring a media business.

The stock is trading above the level of the Comcast offer amid speculation that Fox will make a higher counterbid.

This group of United Kingdom officials has said that whoever buys Fox's assets - which includes its 39 per cent stake in Sky - would have to bid for all of Sky at the same price ascribed to the Sky stake (if the rest of Sky isn't acquired first). Murdoch's higher bid for Sky earlier Wednesday put pressure on Comcast Chief Executive Officer Brian Roberts to come back with a higher price.

Technology companies are soaring Thursday as investors remain optimistic about the sector even though much of the market has been shaken by fears about the trade war with China. In announcing the agreement to buy Fox assets in December, Disney Chairman and CEO Robert Iger called Sky a "crown jewel " of the deal.

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