21st Century Fox proposes Sky News sale to Disney

Ann Santiago
April 4, 2018

21st Century Fox has said it would sell off Sky News to Disney or ring-fence it to allay regulatory concerns over its proposed acquisition of the part of Sky it doesn't already own.

Fox told United Kingdom regulators that Disney is interested in acquiring Sky News regardless of its pending merger with Fox, which executives hope ease concerns over Murdoch's potential British media monopoly.

Fox, which now owns 39% of Sky, in December 2016 launched a bid to take full control of the British company.

Murdoch's long-held ambition to wrest full control of the British broadcaster threatened to be derailed by concerns over media plurality amidst intense scrutiny from the Competition and Markets Authority.

Provisional findings from the CMA found that the merger could be against the public interest, as it would reduce the independence of Sky News and give the Murdoch family increased influence over the media.

Money-losing Sky News is the last regulatory hurdle in 87-year-old Murdoch's long campaign to buy Sky, which has grown from its United Kingdom beginnings to become Europe's biggest pay-TV group.

Another twist in the tale came when America's Comcast, which owns NBC and Universal, unveiled a higher £22.5 billion offer for Sky in February, setting up a race between the two media empires as they both sought to get their hands on the company set up in 1989 by Mr Murdoch.

The plan to hive off Sky News would see it legally separated from the rest of Sky, with a fully independent board and guaranteed funding from Fox for 15 years. That's a slightly stronger version of an idea which media watchdog Ofcom, the first regulator to review the deal, said would "mitigate" concerns.

Disney's move on Tuesday would untangle the process by, in effect, leaping over Fox to acquire Sky News directly.

Alternatively, Disney may pledge to buy Sky News.

"The fact that Disney has agreed this today suggests that the next thing to expect is a revised bid from Fox/Disney for Sky, to match or beat Comcast's offer". But as Disney's deal for Fox is now structured, Disney would get Fox's current 39% ownership stake in Sky, which would include Sky News. Britain's Culture Secretary Matt Hancock will then issue his verdict.

In December, Fox agreed to a $52.4 billion stock offer from Walt Disney for its entertainment assets and global units, including its stake in Sky. Sky shares rose 1 per cent at 8:14 a.m.in London.

Fox said on Tuesday a group of politicians was seeking to influence the CMA, adding they were making "a number of unsupported and fanciful assertions".

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