Fox, Comcast prep for Sky battle

The UK government is expected to give its seal of approval to 21st Century Fox’s takeover of European pay TV operator Sky this week, suggesting a bidding war with rival Comcast is now on the cards.

Rupert Murdoch

Comcast’s £22.1bn (US$30bn) approach for the entirety of Sky has already been given the all-clear by UK culture minister Matt Hancock and the cable giant has until the end of the week to outline its formal bid.

Fox, meanwhile, is waiting for Hancock to formally greenlight its £11.7bn offer, which would hand it the remaining 61% of Sky it doesn’t already own.

A revised bid to rival Comcast’s is then expected from Rupert Murdoch’s Fox, should it receive approval.

Last month the UK government said Fox would have to ensure the annual budget for UK network Sky News remains over £100m (US$130m) to allow it to proceed with its takeover attempt.

Hancock also ruled that if Disney’s US$52.4bn attempt to acquire Fox assets including Sky is successful, the Mouse House would also be required to fund the UK news network.

It also stipulated that Disney would not be able to sell the channel within the first 15 years without the secretary of state’s consent. A final decision on the initial ruling is expected this week.

If, as expected, the UK government does approve Fox’s approach a bidding war seems almost certain, with Comcast’s £12.50 per share offer currently leading.

That values Sky, which has operations across Europe as well as production and distribution interests, at £22bn and beats Fox’s original offer of £10.75 per share, made in 2016, which valued Sky at £18.5bn.

However, the race has some way to go, with City of London analysts now believing the bidding could rise as high as £16 per share, valuing the pay TV operator at around £27.5bn.

Comcast is also involved in a bidding war against Disney to acquire Fox assets, having offered US$65bn for a slew of its entertainment interests, including Sky.

The Mouse House responded with a US$71.3bn bid, which currently leads in that particular battle. Concerns over US regulatory obstacles have lessened since AT&T’s deal for Time Warner made it through the US legal system.