Sky windfall for Murdoch
Disney’s stock and cash offer to inflate billionaire’s pocket
LONDON: In Rupert Murdoch’s six decades of media dealmaking, UK broadcaster Sky Plc stands out as the one that got away.
The octogenarian may still have the last laugh.
While Murdoch’s 21st Century Fox Inc lost out to Comcast Corp in a weekend auction of the UK pay-TV company he launched almost three decades ago, the global media magnate now gets a double payday.
Murdoch was already in line to receive billions of dollars from Walt Disney Co’s US$71bil stock and cash offer for most of Fox’s assets, including a 39% stake in Sky.
Now Comcast’s knockout US$39bil bid has put a rocket under Sky shares, inflating their value for Disney and, ultimately, for Murdoch once he becomes a major Disney shareholder.
It looks like the perfect outcome for the 87-year-old, who set up his first news company in Australia in 1952 and sealed the Disney deal in July partly as a way to step back from his businesses and cement his legacy. Murdoch is already the world’s 60th wealthiest person with a fortune valued at US$17.2bil.
“Murdoch gets the last laugh from a financial perspective,” said Paul Sweeney, an analyst at Bloomberg Intelligence. “He’s sold 21st Century Fox at a really big price and now he’s selling Sky for a really high price.”
Disney shares rose 2.2% to US$112.77 in New York on Monday.
Because the Sky and Fox deals are still pending, it’s hard to say exactly how much Murdoch will make from the flurry of dealmaking. Fox also hasn’t said yet whether it will tender
Comcast.
Comcast’s Sky bid ended Murdoch’s second effort to take full control of the satellite television company he started in 1989. The first was scuppered by a phone-hacking scandal at his UK newspapers and it took him half a decade to try again.
When he did in December 2016, Fox was the only apparent suitor. Then when Comcast entered the fray in February this year, it sent Sky shares soaring. Fox’s Sky stake is now worth more than double what it was before Murdoch’s latest takeover effort.
“Rupert is the big winner in all this,” said Rich Greenfield, an analyst at BTIG LLC. “Sky was near and its 39% stake to dear to Rupert, but beyond that, it’s hard to see him as a loser when he created two bidding wars.”
Fox, based in New York, declined to comment.
Sky got its start when Murdoch set up Sky Television, initially a four-channel offering including sport and movies delivered via satellite. In a speech in Edinburgh that year, Murdoch took on the UK television industry, describing the output of the incumbents as a “parading of the prejudices and interests of the like-minded people” who made up Britain’s elite.
It was a risky venture that made heavy losses in its first year and was forced to merge with rival British Satellite Broadcasting in 1990, taking the name BSkyB.
Rivals were quick to condemn the quality of its output and declared it a non-starter. But Sky became a major platform for Hollywood films and, most importantly, British top-flight soccer. Broadcast rights auctions channeled more money into the Premier League, improving the quality of games and drawing more viewers in a virtuous circle that sent Sky profits soaring.
It listed in 1994, with Murdoch’s company – then News Corp – reducing its stake to 39%.
James Murdoch, Rupert’s youngest son, became CEO of BSkyB in 2003, a position he held until 2007. He then became chairman from 2007 to 2012. That stint coincided with News Corp’s first bid in 2010 for the 61% of Sky it didn’t already own.
Murdoch raised his profile with London’s business and political establishment by taking over the Times of London and Sunday Times newspapers in the 1980s. News Corp, which was spun off from Fox in 2013, continues to own UK papers, including the Times and the Sun, whose tabloid paper and website are Britain’s most-read daily news brand. That helps ensure that Murdoch remains a key figure in the nation’s media.
He’s also splitting off Fox News, the Fox broadcast station and sports networks into a company currently referred to as New Fox.
“Rupert may end up being the smartest mogul in the room,” said Sweeney. “He sells the majority of his company at peak multiples and gets to keep the assets he wants.” — Bloomberg