Fox Says Disney Could Buy U.K.'s Sky News -- 3rd Update
April 03 2018 - 12:42PM
Dow Jones News
By Ben Dummett and Stu Woo
LONDON -- 21st Century Fox Inc. on Tuesday said Walt Disney Co.
was prepared to buy the news channel of British pay-TV operator Sky
PLC, a proposal that could bolster its position in a contentious
trans-Atlantic takeover battle that includes U.S. cable giant
Comcast Corp.
The offer to sell Sky News is Fox's latest attempt to overcome
U.K. regulators' opposition to its $16 billion plan to take full
control of Sky. British authorities have expressed concern Fox's
full ownership of Sky and its Sky News, an unprofitable 24-hour
news channel, would give Fox Executive Chairman Rupert Murdoch too
much influence in British media.
The Sky News proposal comes as Disney pursues a separate,
friendly $52 billion bid to acquire the majority of Fox's assets,
including its film studios and Sky interest. Disney said on Tuesday
if the British government allows Fox to consolidate all of Sky, it
is open to acquiring Sky News even if the larger transaction
doesn't proceed. It pledged to "sustain the operating capital of
Sky News and maintain its editorial independence."
Disney's interest in acquiring the news channel is the latest
twist in a complex takeover tussle that pits it against Comcast in
the battle for original programming and subscribers. Disney views
Sky as an important component of its deal to buy Fox assets and key
to its plans to expand its international footprint. Comcast
launched its own $31 billion offer for Sky in February.
The suitors are after Sky for its unusually large breadth of
services and reach. It is both a telecom operator -- selling TV,
internet and phone services -- and a media company with original
news, sports and entertainment programming.
Sky, which operates in seven European countries, is a smaller
version of what American media giants are trying to become: owners
of TV and internet "pipes" as well as the programming that flows
through them. The model is what AT&T Inc. is trying to build
through its $85 billion pursuit of Time Warner Inc.
Fox, which currently owns 39% of Sky, in December 2016 launched
a bid to take full control of the British company. The deal has
faced a series of regulatory hurdles. In a preliminary finding
earlier this year, U.K. antitrust authorities said Fox's full
ownership of Sky and its Sky News operations would give Fox
Executive Chairman Rupert Murdoch too much influence in British
media.
The Murdoch family controls a 39% voting interest in both Fox
and in News Corp, which publishes major British newspaper including
the Sun, the Times of London and the Sunday Times. News Corp also
owns The Wall Street Journal.
Fox said in February it would create an independent board for
Sky News, and fund the business for five years, to win regulatory
support. Fox sweetened the offer on Tuesday.
Fox said it could sell Sky News to Disney. Alternatively, it
said it could establish Sky News as a separate company within the
bigger Sky group, with an independent board. It also pledged 15
years of guaranteed funding for the news channel.
"The enhanced firewall remedies we proposed to safeguard the
editorial independence of Sky News addressed comprehensively and
constructively the [regulators'] provisional concerns," Fox
said.
The British antitrust regulator, the Competition and Markets
Authority, wouldn't comment on the Fox proposals.
The authority has until May 1 to make a final recommendation to
the U.K. government, which then must decide whether to back the
Fox-Sky deal, approve it with conditions or reject it.
Even with government approval, the Fox-Sky deal isn't certain.
At least 75% of Sky's shareholders, not including Fox, need to
support the takeover, which faces competition from Comcast.
In February, Comcast announced plans to bid GBP22.1 billion
($31.04 billion), or GBP12.50 a share, for all of Sky, well above
Fox's offer of GBP10.75 a share.
Sky currently trades higher than the Comcast proposal,
indicating that investors are expecting a bidding war. Hedge fund
Elliott Management Corp. has been gradually increasing its stake in
Sky, most recently to 2.8% on March 29. Sky shares were up 2% at
GBP13.25 in afternoon trading in London.
Write to Ben Dummett at ben.dummett@wsj.com and Stu Woo at
Stu.Woo@wsj.com
(END) Dow Jones Newswires
April 03, 2018 12:27 ET (16:27 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Walt Disney (NYSE:DIS)
Historical Stock Chart
From Aug 2024 to Sep 2024
Walt Disney (NYSE:DIS)
Historical Stock Chart
From Sep 2023 to Sep 2024