Comcast’s $31bn bid for Sky to spark battle with Fox
Sky withdraws backing for Fox offer * Sky shares jump in prospect of bidding war
LONDON/NEW YORK: US media group Comcast submitted a £22 billion ($30.7 billion) bid for Sky, prompting the European pay TV group to drop its support for a lower offer from Rupert Murdoch’s Twentyfirst Century Fox.
Sky’s independent directors welcomed Comcast’s 12.50 pound per share bid and said they would now engage with both Comcast and Fox. They cautioned that neither bid could yet be put to shareholders and advised them to take no action for now.
The bid formalises an offer first made in February and puts pressure on Fox, which already has a 39 per cent stake in Sky, to raise the 10.75 pound per share cash offer it first announced in December 2016. It said on Wednesday it remained committed to its offer and was considering its options.
The deal has been held up by concerns about the influence Murdoch could wield over public opinion through owning all of the broadcaster as well as British newspapers including The Times and The Sun. The proposed combination has been further complicated by Fox’s agreement to sell many of its TV and film assets to Walt Disney Co, including its stake in Sky, for $52 billion.
On Wednesday, Sky also welcomed commitments the US cable giant had made to address potential public-interest concerns over Sky News, its influential 24-hour news channel.
“As a result of the announcement of this higher cash offer, the Independent Committee is withdrawing its recommendation of the offer announced by 21CF on December 15, 2016 and is now terminating the co-operation agreement entered into with 21CF on the same date,” Sky said in a statement. PJT Partners is the lead advisor for Sky.
Comcast Chairman and Chief Executive Brian Roberts said Sky withdrawing its recommendation was what it wanted to achieve by formalizing its offer on Wednesday.
“The board confirming they are going to focus on the shareholders, that’s the perfect step as far as we are concerned today,” he told reporters.
Sky is chaired by Murdoch’s son James, who played a key role in building the company into a major European broadcaster with operations in Germany, Austria and Italy as well as Britain.
Sky formed a committee of independent directors to consider the bids, given James Murdoch’s role as chief executive of Fox.
Sky shares were up 3.8 per cent at 13.57 pounds by 1434 GMT — well above the offer price, implying that some shareholders anticipated a bidding war. Comcast shares were 3.9 per cent higher, while Fox’s rose 2 per cent and Disney gained 1.5 per cent.
Hedge fund Elliott has taken a stake of almost 3 per cent in Sky, according to its latest filing, and other shareholders have also argued that Disney’s agreement to buy Fox implies a higher value for Sky.
Little known in Europe, Philadelphia-based Comcast is the biggest US cable operator, owning broadcasters NBC, CNBC and MSNBC.
It also owns movie studio Universal Pictures, home to “Minions” and “Jason Bourne” movies and some theme parks.