U.K. Clears Path for Fox to Partake in Bidding War for Sky -- 2nd Update

By Stu Woo 

LONDON -- The U.K. government has all but given Rupert Murdoch's 21st Century Fox Inc. permission to partake in a bidding war for British pay-TV giant Sky PLC, clearing one of the last obstacles for a corporate takeover battle that also includes Walt Disney Co. and Comcast Corp.

British Culture Secretary Matt Hancock earlier this month indicated he would approve Fox's $15 billion bid to buy the 61% of Sky it doesn't already own, on the condition that Fox sell Sky's news channel if its bid succeeds. On Tuesday, Mr. Hancock said he approved of Fox's sweetened proposal to sell the channel to Disney, which itself is trying to buy the majority of Fox.

The British government said that as well as proposing to sell Sky's news business to Disney, Fox had pledge to fund the operation for 15 years rather than the 10 years it proposed previously. The government also said Disney must formally commit to preserve the news operation's editorial independence, and that it would require government approval to sell the news business within 15 years.

Formal approval is now expected after a 15-day period for feedback.

The U.K. government was concerned that Fox's full ownership of Sky would give Mr. Murdoch and his family too much influence in British media. Mr. Murdoch and his family are major shareholders in both Fox and News Corp, which publishes three U.K. newspapers as well as The Wall Street Journal.

The expected green light from the U.K. sets up a complicated bidding war for Sky. On one side is Fox and Disney, which has proposed buying most of Fox -- including its 39% Sky stake -- in a $52 billion all-stock deal. On the other side is cable giant Comcast, which in February launched its own $29 billion to buy all of Sky, offering GBP12.50 ($16.47) a share. That is higher than Fox's GBP10.75 proposal. In addition, Comcast last week topped Disney's offer for Fox assets with a roughly $65 billion cash offer.

Both Disney and Comcast are trying to increase their international footprints, and both have said they consider Sky one of Fox's most appealing assets.

Operating in seven European countries, Sky is a smaller version of what U.S. media companies are trying to become: a telecommunications providers that also owns the programming that flows through its airwaves and wires. Sky sells phone, TV and internet services, and it also produces its own sports, entertainment and news programming.

The possibility of vertically integrating communications services with content drove AT&T Inc.'s $85 billion purchase of Time Warner Inc., and analysts say the recent court approval of that merger may lead to more deals just like it.

Fox and Sky said in separate statements that they welcomed the U.K. government's announcement.

Write to Stu Woo at [e-mail]

(END) Dow Jones Newswires

June 19, 2018 12:59 ET (16:59 GMT)

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