Murdoch's Fox agrees $14.6 billion Sky deal to expand empire

Janis ColeDec 17, 2016

Broadcaster Sky and 21st Century Fox reach agreement on the terms of a takeover by 21st Century Fox.

The deal valuing Sky at £18.5 billion comes five years after Australian-born media mogul Murdoch failed to clinch a takeover after a notorious phone-hacking scandal at his newspaper empire.

21st Century Fox, the world's fourth-largest media company after Comcast, Disney and Time Warner, now owns 39.1% of Sky and it has always been speculated in the City that it would seek to buy full control.

21st Century Fox is the world's premier portfolio of cable, broadcast, film, pay TV and satellite assets spanning six continents across the globe.

Politicians from across the spectrum want to see the deal referred to the broadcasting regulator Ofcom.

Rupert Murdoch and Sky headquarters
GETTY BID Sky has agreed to a takeover by Rupert Murdoch

Murdoch is "is not expected to stray" from that price, which represents a 28 per cent premium to the 836p at which Sky's shares were trading immediately before news of the deal emerged.

Sky has annual revenues of approximately £12 billion and is Europe's leading investor in television content with a combined programming budget of over £5 billion.

Fox's latest approach has spurred fresh complaints over corporate governance at Sky, where Murdoch's son James returned as chairman this year.

"We scratch our heads in terms of what a distribution company headquartered in the United Kingdom does for a global content company headquartered in the U.S. over the long term", Wells Fargo analysts led by Marci Ryvicker wrote in a December 12 research note.

Fox predecessor News Corp., which later split its publishing and entertainment assets into separate companies, had in 2011 abandoned a previous attempt to buy full control of Sky amid the United Kingdom phone-hacking scandal. Former editor of the News of the World Rebekah Brooks, nee Wade, is News UK's chief executive.

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The transaction has been arranged so that it only requires approval from 75 per cent of Sky shareholders who vote on the deal.

Given the outcry over the last bid, it seems likely she will do that but the media landscape has changed a great deal since the last takeover attempt.

The latest move is subject to regulatory approval, with United Kingdom culture secretary Karen Bradley having 10 working days to decide if the deal raises public interest concerns around media plurality.

Then, as now, the dominant provider of news in the United Kingdom is the BBC.

The combination will face scrutiny by European competition watchdogs and could also be referred to British authorities to examine its impact on media plurality.

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Sky traces its origins to Sky Television - which was launched by Rupert Murdoch in February 1989.

Fox proposed the purchase comes at a good time for the American media company because Sky's shares were down and because the USA dollar has been particularly strong since Britain's "Brexit" vote to leave the European Union.

Sky shares were up 0.15% to just under 10 pounds.

Murdoch now owns 39 per cent of Sky.

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