Fox agrees to pay $14.6 billion for Sky TV
LONDON (Reuters) - Rupert Murdoch’s Twenty-First Century Fox has struck a $14.6 billion deal to buy European pay-TV firm Sky that unites a media empire across two continents and helps it take on rivals like Netflix in the battle for viewers.
Fox said it would pay 10.75 pounds per share - or 11.7 billion pounds - for the 61 percent of Sky it does not already own to control a business with 22 million customers in Britain, Ireland, Italy, Germany and Austria.
People familiar with the matter told Reuters the American media corporation pounced after Britain’s vote to leave the European Union in June sent the pound down about 15 percent against the U.S. dollar and Sky’s share price tumbling.
The Murdoch family have never wavered in their ambition to take full control of Sky, despite the damaging failure of a previous attempt five years ago when their British newspaper business became embroiled in a phone-hacking scandal.
The agreement comes just over a week after Fox first approached Sky and follows several days of haggling in London which resulted in Fox lifting its offer three times to secure the backing of Sky’s independent directors, according to two people familiar with the situation. The deal values all of the company at 18.5 billion pounds.
James Murdoch, the chief executive of Fox and chairman of Sky, said the British-based company had led the way in delivering premium content like English Premier League soccer and the “Game of Thrones” fantasy drama across multiple platforms including satellite, broadband and mobile.
“Sky is much more than a satellite distribution company, it’s a creative, commercial and consumer powerhouse,” the son of 85-year-old business patriarch Rupert told analysts on a call.
The deal is the latest one to marry distribution with content after AT&T Inc announced an $85 billion bid to buy Time Warner Inc earlier this year.
After winning the backing of Sky’s independent directors, Fox will need to secure regulatory approval in Europe and Britain and win over those Sky shareholders who believe the price is too low.
Fox will pay a 200-million-pound break fee if it fails to pull off the deal, and has opted for a scheme of arrangement. This means that the bid must win the backing of shareholders representing 75 percent of the Sky stock not owned by Fox.
The re-emergence of the Sky deal shows Murdoch believes the reputational damage caused by the phone-hacking scandal at the now-defunct News of the World tabloid is behind them.
Since the scandal exploded in 2011, he has split his business into two parts, with Fox housing the TV assets and his newspapers owned by News Corp.
But critics will argue that despite the split, Murdoch and his sons James and Lachlan still control both firms.
The new Sky offer has already sparked concern, with several politicians attending a debate in parliament this week to urge the government to properly scrutinise the deal.
The price of 10.75 pounds per share, representing a premium of around 40 percent on the day before the initial proposal was received, has also disappointed several top-50 shareholders who accused Sky of selling out too cheaply to their founder and biggest shareholder.