Disney's Sky News move eliminates obstacle to Murdoch's £11.7bn takeover

CREDIT Sky  HBO

21st Century Fox Inc. on Tuesday said Walt Disney Co. was prepared to buy the news channel of British pay-TV operator Sky PLC, a proposal that could bolster its position in a contentious trans-Atlantic takeover battle that includes USA cable giant Comcast Corp.

Alternatively, The Walt Disney Company has expressed an interest in acquiring Sky News, with a view to adding it to Disney's existing portfolio of television channels.

Fox agreed to buy all of the European pay-TV group in December 2016, but the deal has been repeatedly delayed by the British government and regulators.

Giant Fox from the Murdoch family has offered to divest Sky News, one of Disney's Sky channels, to get the go-ahead from British competition authorities who are investigating his desire to get 100% Sky, according to documents released Tuesday.

The CMA in January said it had provisionally found that Fox taking full ownership of Sky is not in the public interest due to media plurality concerns. The Murdoch family already own News UK, the owner of the Times and the Sun.

Fox is continuing to work with United Kingdom regulators on finalizing the deal for Sky while also fending off a rival bid from Comcast. Quoted in the FT, an aide to Mr. Cable said he would be content with the deal, so long as "Sky News were truly independent as part of any deal, and James Murdoch didn't somehow appear on a board of directors somewhere". It pledged to "sustain the operating capital of Sky News and maintain its editorial independence".

Twenty-First Century retain a 39% stake in Sky and, subject to ultimately obtaining regulatory approval, remain focused on acquiring the remaining 61% of Sky.

The group, which has a broadband arm serving 29 million U.S. customers, owns NBC and Universal Pictures and wants to seize more than 50 per cent of Sky.

Disney would guarantee to continue funding the loss-making Sky News for five years at the present level and for a further five years at a level "not materially different" from now.

He went on to say that Sky's comment telling shareholders to "take no action at this stage" was: "somewhat of a coded signal to Sky shareholders not to accept the Comcast bid as there may be a counter-offer coming through from Fox (and, by implication, Disney)".

The proposed transaction has however been complicated by a rival £22bn bid for Sky from broadcaster Comcast, owner of NBC and Universal Studios, in February.

Sky now trades higher than the Comcast proposal, indicating that investors are expecting a bidding war.

"We have now submitted a new, revised set of remedies should they be considered necessary by the CMA and ultimately by the Secretary of State for Digital, Culture, Media and Sport", Fox said in a statement.

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