Rupert Murdoch’s 21st Century Fox has bid for full control of Sky five years after the phone hacking scandal derailed its first attempt. The new deal values the UK pay TV company at £18.5 billion (€17.6 billion).
The £10.75-a-share all-cash offer for the 61 per cent of Sky the US media group does not already own would be one of the largest acquisitions of a UK company since June’s Brexit vote. It also comes as weakness in the pound has made UK targets cheaper for international buyers.
In contrast to its 2010 bid, which collapsed in 2011, Fox has secured Sky directors’ approval for its offer price. The valuation represents a 40 per cent premium to Sky’s closing share price on December 6th, the day before Fox’s initial approach. If approved, the deal will cost Fox around £11 billion. Sky’s share price closed up 27 per cent at £10.
The bid comes amid a new phase of media consolidation driven by changes in distribution technologies and audiences’ viewing habits. Like AT&T’s recent $86 billion offer for Time Warner, a combined Fox-Sky will unite a content production company with a distributor that has direct satellite, broadband and mobile connections to millions of consumers. In 2014, Fox tried but failed to buy Time Warner.
Global business
In a statement, Fox said the move would bring together its global content business with Sky’s “direct to consumer capabilities”. It said it had regularly stated that its existing 39.1 per cent stake in Sky was “not a natural end position”.
In 2010, Fox was part of Mr Murdoch’s News Corp media empire, which launched a £7.8 billion bid for the whole of Sky. However, it abandoned its pursuit a year later amid a political outcry over News Corp journalists’ illegal access of the phone messages of celebrities, politicians and Milly Dowler, a murdered schoolgirl.
The Fox offer will pose the first major test of UK media regulation since Theresa May became prime minister. During the first bid for Sky, then culture secretary Jeremy Hunt sought editorial independence pledges from the bidder in an effort to stem concerns about media plurality.
With Fox now separated from News Corp's newspapers, which include the Sun and the Times, it is unclear whether the bid will face the same plurality tests it did five years ago.
Copyright The Financial Times Limited 2016
