Comcast, Murdoch’s Fox in race to buy Sky TV

FE Team | Published: March 11, 2018 22:39:14

LONDON, Mar 11 (Reuters): Comcast's gatecrashing of Rupert Murdoch's eight-year campaign to buy pay-TV group Sky has sparked a regulatory race with 21st Century Fox.
Fifteen months after finally agreeing a takeover of Sky, Murdoch had been edging towards approval by offering remedies to overcome long-held concerns that he holds too much media sway in Britain, where he owns the Sun and Times newspapers. But Comcast, the owner of NBC and Universal, has made investors a higher offer with no political baggage for a business that Murdoch helped to launch and owns 39 per cent of.
Fox has called on regulators to submit Comcast to the same lengthy scrutiny it received, but competition lawyers say it could gain clearance in a relatively fast probe.
Comcast offered 12.50 pounds per share, or 22.1 billion pounds ($31 billion). It has not yet made a firm bid and is sounding out investors through its brokers, BAML, sources say.
It wants to own all of Sky but will accept taking control with 50 per cent plus one share if Fox decides not to sell its 39 per cent stake. Fox has a separate deal to sell assets to Walt Disney, including Sky.
Murdoch agreed to buy the 61 per cent of Sky it did not already own in December 2016 for 10.75 pounds per share, valuing the entire business at 18.5 billion pounds.
This followed a failed attempt to buy Sky in 2010, which collapsed when journalists at one of Murdoch's papers admitted hacking into phones to secure news, sparking a criminal trial, a public inquiry and questions over his role.
One person familiar with the matter said Comcast was asking hedge fund managers how much Sky stock they controlled, indicating a belief that Fox will hold on to its stake and setting the stage for a lengthy battle.
UBS said the price could go as high as 1500 pence, driven by the fact Sky has continued to develop its technology since Fox's bid and last month secured the rights to show Premier League matches for a lower fee than expected, boosting future earnings.
Comcast will need 82 per cent acceptance from independent Sky shareholders while Fox is targeting 75 per cent, meaning 15 per cent of independent investors could block the deal.
Comcast is providing information to the European Commission and believes it can get approval in the so-called Phase 1 of the investigation, avoiding a prolonged process. It could take several weeks before Comcast files a formal notification.
Brussels will examine whether a Comcast-owned Sky could be anti-competitive when dealing with rival channels on its platform and whether there is a threat from putting Sky in the same company as film studio Universal.
The regulator could also consider if Sky would be owned by companies holding three of the six major film studios if Comcast owns 61 per cent and Walt Disney retains Murdoch's 39 per cent.
Comcast would argue that were Fox or Disney to retain 39 per cent, they would be a financial investor with no commercial or operational link with Sky.
In terms of previous conduct, Comcast was accused by US regulators in 2012 of breaching a condition imposed when it bought NBC Universal, by discriminating against rivals in favour of its own channels when placing them on the programme guide.