United Kingdom culture secretary throws Murdochs a lifeline to Sky

by Frankie Norman June 8, 2018, 3:10
United Kingdom culture secretary throws Murdochs a lifeline to Sky

The UK government will let 21st Century Fox take over Sky if it sells Sky News.

Britain on Tuesday opened the way for a bidding war between U.S. cable giant Comcast and Rupert Murdoch's 21st Century Fox over pan-European TV group Sky, but warned that Fox would have to sell off Sky News to address concerns about media plurality.

Should Fox succeed in its bid for Sky, the Murdochs would likely soon step aside, with both the Walt Disney Company and Comcast bidding in the USA for the bulk of Fox's media assets.

Tom Watson, the Shadow culture secretary, said that the approval of both bids "means that this is not the end of the story".

Matt Hancock's statement on Tuesday will lay out whether the government will block or permit the deal subject to certain conditions.

News Corp., which is controlled by the Murdochs, withdrew its bid for Sky soon after.

Investors are clearly hoping for more: Sky shares rose on Tuesday to trade at £13.60 ($18.20).

"I agree with the CMA that divesting Sky News to Disney, [which has separately bid for Fox assets including Sky] as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified".

Regulators in the United Kingdom have cleared separate bids for satellite TV operator Sky, setting up a showdown between Comcast and 21st Century Fox as to which will actually wind up with the asset.

Comcast's cash offer values each Sky share at £12.50, which is significantly higher than Fox's offer of £10.75.

Sky was formed in 1990 when Murdoch merged his fledgling British satellite TV service with a rival. Sky has 22.5 million customers in Britain, Ireland, Germany, Austria and Italy. Amazon and Netflix are ascendant, the old order is being shaken-up.

Fox responded: "We now look forward to engaging with DCMS (Department for Digital, Culture, Media and Sport) and we are confident that we will reach a final decision clearing our transaction".

Fox's bid, however, would require a divestment. The most likely purchaser is Disney, which agreed past year to buy a major chunk of Fox assets including its existing 39% stake in Sky.

He said: "Were the Fox-Disney deal to fail, it could leave Sky News isolated from Sky and owned by a foreign company with few news interests in the UK".

The fate of the British Broadcaster has been under a cloud as the UK's media regulator previously recommended against allowing media mogul Rupert Murdoch's business interests to acquire full ownership.

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