The UK government has cleared two bids for Sky from Rupert Murdoch's 21st Century Fox and Comcast, setting up a bidding war for the pan-European media company.
Matt Hancock, the culture secretary, waved the Comcast bid through, saying there were no broadcasting standards or public interest grounds on which to intervene. On the Fox deal, he agreed that a commitment by Fox to sell Sky News to Walt Disney was sufficient to alleviate concerns about UK media plurality.
Discussions will now begin between officials at the Department for Culture, Media and Sport, and Fox, Sky and Disney “to finalise the details with a view to agreeing an acceptable form of the remedy”, Mr Hancock told parliament.
Scrutinised
Fox’s bid of £10.75 a share values Sky — which was founded by Mr Murdoch — at about £18.5 billion (€21.1 billion). Its offer has been scrutinised by two regulators, first Ofcom, the UK media watchdog, then the Competition and Markets Authority, for 16 months.
Comcast made a competing offer for Sky this year at £12.50 a share, which valued the company at about £22 billion.
“I agree with the CMA that divesting Sky News to Disney. . . or to an alternative suitable buyer, with an agreement to ensure it is funded for at least 10 years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified,” Mr Hancock told parliament.
He added that any sale had to ensure that Sky remained financially viable over the long term, would continue to operate as a UK-based news provider and was able to maintain its editorial independence.
The sale of Sky News to Disney was first proposed by Fox several months ago to allay regulatory concerns about its bid. “We note that the secretary of state agrees with this solution,” the company said.
Disney said it was “ready to engage in any discussions requested by the secretary of state”.
The Fox bid for Sky has attracted significant political opposition, with a cross-party group of MPs that includes Ed Miliband and Ken Clarke pushing to have the deal blocked.
Tom Watson, the shadow culture secretary, hit out at the proposed sale of Sky News to Disney, pointing to possible repercussions from Fox's own planned sale of its entertainment assets. Disney is attempting to buy those businesses, including Fox's Hollywood movie studio and its 39 per cent stake in Sky, in a $66 bn deal, including debt.
Proposal
“Were the Fox-Disney deal to fail it could leave Sky News isolated from Sky and owned by a foreign company with few news interests in the UK. It’s hard to see how that would be in the public interest,” Mr Watson said.
With Disney hoping eventually to acquire Sky via its purchase of the Fox assets, Comcast is fighting Disney on two fronts. Comcast, the US’s largest cable operator and the owner of NBCUniversal, recently said it was working on a rival proposal for the Fox assets that would be pitched at a “superior” price to the Disney offer.
The takeover battle is raging amid significant upheaval in the media landscape. The rise of companies such as Netflix and Amazon has fuelled sweeping changes in consumption patterns, which has put pressure on established media groups to consolidate in order to stay relevant and prosper.
Copyright The Financial Times Limited 2018
