Wednesday 19 September 2018

Murdoch's Fox could sell news unit to Disney to seal Sky deal

Mickey Mouse and Bob Iger, chairman and CEO of The Walt Disney Co, ring the opening bell on Wall Street last year with Tom Farley, president of the New York Stock Exchange Group
Mickey Mouse and Bob Iger, chairman and CEO of The Walt Disney Co, ring the opening bell on Wall Street last year with Tom Farley, president of the New York Stock Exchange Group

Paul Sandle

Rupert Murdoch has stepped up the pressure on Britain to approve his $14.5bn (€11.8bn)bid for Sky by offering to sell or legally separate Sky News, seeking to allay concerns about the 87-year-old mogul's political influence.

Murdoch's Twenty-First Century Fox said yesterday that Sky News could be sold on to US rival Walt Disney Co or become a legally separate business within the Sky group.

Rupert Murdoch
Rupert Murdoch

Fox agreed in December 2016 to buy the 61pc of European pay-TV group Sky it does not already own, but the deal has been repeatedly delayed by the UK government and regulators.

Fox had already promised that Sky's 24-hour news service would remain independent under the ultimate control of Mr Murdoch, inset.

However, British critics, including some high-profile politicians, remain adamantly opposed due to Murdoch's record of influence through owning the 'Sun' and the 'Times' newspapers.

The delay enabled US cable giant Comcast Corp to gatecrash the deal in February by saying it would offer £12.50 a share to buy Sky, compared with Fox's £10.75 - although it has not yet made a formal bid. As the Sky deal remained in regulatory limbo, Fox separately agreed to sell a string of assets, including its 39pc stake in Sky, to Disney, potentially taking Murdoch out of the Sky equation.

Fox said yesterday that its new concessions went beyond the steps that Britain's media regulator Ofcom said would mitigate concerns about Murdoch's influence.

The company, however, needs to persuade another regulator, the Competition and Markets Authority (CMA), and the UK government.

"We have worked diligently with the CMA throughout its extensive review," it said.

"In fact, we believe that the enhanced firewall remedies we proposed to safeguard the editorial independence of Sky News addressed comprehensively and constructively the CMA's provisional concerns."

Fox said it could legally separate Sky News within the wider Sky group, so it would operate independently with guaranteed funding for 15 years.

Alternatively, it said Disney had expressed an interest in acquiring the 24-hour news channel, whether or not Disney's proposed acquisition of Twenty-First Century Fox went ahead.

Fox senior vice president Gerson Zweifach said the solutions addressed all concerns about the transaction.

"We look forward to concluding this acquisition - finally - in a timely and expeditious manner," he said.

Sky shares were up 0.9pc at £13.09 by early morning yesterday, above both the agreed offer from Fox and the proposed bid by Comcast. Analysts at Liberum said Fox's latest concessions should be enough to secure approval. They also said that two factors pointed to Fox coming back with a revised bid to match Comcast.

First, Fox must have received approval from Disney to offer the concession, they said, and second, Sky said its independent directors remained focused on maximising value for shareholders.

Separate news yesterday that Sky Italia had settled its long-running fight with Mediaset in the Italian pay-TV market also made Sky more valuable, they added.

Irish Independent

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