UK gov’t rules on Comcast, Fox

US media giant Comcast has received the greenlight from the UK government for its proposed takeover of European satcaster Sky, but fellow bidder 21st Century Fox must sell Sky News to be able to proceed.

Rupert Murdoch

Culture minister Matt Hancock said he did not believe a Comcast-owned Sky would raise public-interest concerns, confirming his initial comments on the takeover made in May.

However, Hancock said Fox’s bid for the company did raise such concerns, citing a potential erosion of Sky News’s editorial independence and the further influence it would give to Fox owner Rupert Murdoch.

He added that various suitable remedies could include selling the news network to Disney, which is in talks to buy a slew of Fox assets as part of a separate deal, or selling to a third-party operator.

A final decision from Hancock is now expected within 14 days, with Fox having already made plans to divest Sky News to Disney to ensure its future.

Fox welcomed Hancock’s ruling, adding: “Regarding the effects on media plurality, we note that the Competition and Markets Authority recommended to the secretary of state that divestiture is ‘the most effective and proportionate remedy.’

“21st Century Fox has already submitted proposed undertakings to achieve the divestiture of Sky News to Disney. We note that the secretary of state agrees with this solution and has instructed officials from the Department for Culture, Media and Sport [DCMS] to agree final undertakings that he would be prepared to accept and consult on within the two-week timeframe.

“We now look forward to engaging with DCMS and we are confident that we will reach a final decision clearing our transaction.”

Sky also welcomed the news, adding that its independent directors were “mindful of their fiduciary duties and remain focused on maximising value for Sky shareholders.”

It paves the way for a bidding war to decide the future of the European pay TV operator, which is subject to a £22.1bn (US$31bn) bid from Comcast and a long-standing £11.7bn offer from 21st Century Fox. The latter would see Fox buy the 61% of Sky that it doesn’t already own, in a deal that was resurrected at the end of 2016.

The initial Fox bid was withdrawn amid the phone-hacking scandal that engulfed Rupert Murdoch’s News International newspaper titles in 2011.

Fox’s more recent attempt has become mired in regulatory issues after UK regulator the Competition and Markets Authority found it was not in the public interest, citing concerns over media plurality.

As part of its offer, Comcast has promised not to acquire a majority stake in any UK newspaper, one of the major concerns over the Murdoch-backed bid.

The deals have been complicated by Disney’s potential acquisition of Fox assets, which Comcast is now also looking to buy.

Disney agreed a US$52.4bn stock deal for Fox assets, including its film and TV studios, US cable networks and international channels, in one of the biggest media stories of 2017.

However, it then emerged Comcast was preparing a bid in the region of US$60bn, with an eventual winner likely to face numerous hurdles in terms of US regulatory concerns.