trending Market Intelligence /marketintelligence/en/news-insights/trending/difky78vjt-7vdndtxu0uw2 content esgSubNav
In This List

UK approves Fox takeover of Sky, subject to Sky News sale; clears Comcast bid

Blog

Broadcast deal market recap 2021

Blog

Price wars in India: Disney+ Hotstar vs. Amazon Prime Video vs. Netflix

Blog

Volume of Investment Research Reports on Inflation Increased in Q4 2021

Blog

Using ESG Analysis to Support a Sustainable Future


UK approves Fox takeover of Sky, subject to Sky News sale; clears Comcast bid

The British government conditionally approved 21st Century Fox Inc.'s proposed £11.7 billion takeover of Sky PLC, while it said it will not intervene in Comcast Corp.'s rival bid for the British pay TV giant. The decision means the two media giants could go head to head in a fierce bidding war.

Matt Hancock, U.K. secretary of state for digital, culture, media and sport, said Fox's proposal to divest news service Sky News (UK) to Walt Disney Co. or to "an alternative suitable buyer" is the most proportionate remedy, even though there are still issues about Sky News' funding in the long term, he added.

"If we can't agree on the terms, the [Fox] merger will be blocked but that is not my preferred approach," Hancock said.

He called for immediate discussions with the parties involved, in order to finalize the details within 15 days, "so we can all be confident Sky News can be divested in a way that works for the long term."

Meanwhile, Hancock also told U.K. parliamentarians that he will not intervene in Comcast's proposed bid for Sky since it "does not meet the threshold for intervention." He said he made the decision after not receiving any comments from interested parties about the deal.

"As a result, I have concluded that the proposed merger does not raise public interest concerns and so I can confirm today that I will not be issuing an intervention notice," Hancock told the U.K. House of Commons.

The rival bid from Comcast is offering £12.50 per Sky share, representing a 16% premium compared to Fox's December 2016 offer of about £11.7 billion for the nearly 61% stake in Sky that Fox does not already own.

In a statement, Sky welcomed the announcement and added that Hancock said that the measures proposed by Fox were a "good starting point to overcome the adverse public interest effects of the proposed merger that he has identified."

Fox said in a response that it is "confident that we will reach a final decision clearing our transaction."

Hancock's decision comes shortly after the U.K. government received the final report from the Competition and Markets Authority about its six-month assessment of the proposed transaction over broadcasting standards and media plurality. Hancock's predecessor, Karen Bradley, referred the Fox/Sky deal to the CMA in September 2017.

The CMA provisionally ruled in January that the deal would not be in the public interest on media plurality grounds, as a takeover by Fox would place Sky News and newspapers The Times and The Sun all in the hands of the Murdoch Family Trust.

The watchdog proposed remedies that include spinning off or divesting Sky News, blocking the deal entirely or behavioral solutions such as appointing independent directors.

While Sky CEO Jeremy Darroch said Sky News is not a "critical" part of the company's business, Fox improved its offer to Sky by extending its commitment to fund Sky News for at least 10 years, an improvement on Fox's earlier offer of "firewall remedies" at Sky News.

An initial assessment of the takeover in June last year by Ofcom has found that the proposed deal raised public interest concerns over media plurality, but that it would not violate the commitment to broadcasting standards.

Despite facing a tough regulatory climate in Britain, the Fox/Sky deal secured approvals from EU antitrust regulators in April 2017 and from the Republic of Ireland in June of that year.

Comcast's offer came as Fox is reportedly under increased pressure to improve its December 2016 bid for Sky after the latter secured a range of Premier League rights packages under a three-year contract for £1.19 billion per year.

Comcast Chairman, President and CEO Brian Roberts has welcomed the growth opportunities offered by the company's planned acquisition of Sky, noting the latter's "similar business model in new and attractive geographies."

Fox itself is currently in the midst of being taken over by Disney. In December 2017, Disney struck a $52.4 billion deal with Fox for many of its assets. If approved, the Disney/Fox deal would place Fox's stake of roughly 39% in Sky in Disney's hands.

Britain's Takeover Panel recently ruled that Disney must submit an acquisition offer for Sky if its Fox deal succeeds, but that Fox is barred from acquiring all of Sky.

Comcast has revealed it is preparing an offer to acquire assets that Fox agreed to sell to Disney.