Fox Says Disney Is Prepared to Buy Sky News in Bid to Allay Regulators – Wall Street Journal


Fox Says Disney Is Prepared to Buy Sky News in Bid to Allay Regulators – WSJ

Proposal is Fox’s latest attempt to overcome concerns over plan to take full control of Sky

LONDON—

21st Century Fox
Inc.


FOX -0.32%

on Tuesday said

Walt Disney
Co.


DIS -0.05%

was prepared to buy the news channel of British pay-TV operator

Sky


SKYAY 0.22%

PLC, a proposal that could bolster its position in a contentious trans-Atlantic takeover battle that includes U.S. cable giant

Comcast
Corp.

The move is Fox’s latest attempt to overcome U.K. regulators’ concerns over its $16 billion plan to take full control of Sky.

It comes as Disney pursues a separate, friendly $52 billion bid to acquire the majority of Fox’s assets, including its film studios and Sky interest. Fox said Disney is open to acquiring Sky News, an unprofitable 24-hour news channel, even if the larger transaction doesn’t proceed.

Disney’s interest in acquiring the news channel is the latest twist in a complex takeover tussle that pits it against Comcast in the battle for original programming and subscribers. Disney views Sky as an important component of its deal to buy Fox assets and key to its plans to expand its international footprint. Comcast launched its own $31 billion offer for Sky in February.

Jan. 23, 2018

British regulators say Fox ownership of all of Sky isn’t in public interest, but leave door open for remedial moves

Feb. 27, 2018

Comcast offers to buy all of Sky

April 3, 2018

Fox says Sky News

could be carved out from Sky or sold to Disney

to allay U.K. concerns ​

The suitors are after Sky for its unusually large breadth of services and reach. It is both a telecom operator—selling TV, internet and phone services—and a media company with original news, sports and entertainment programming.

Sky, which operates in seven European countries, is a smaller version of what American media giants are trying to become: owners of TV and internet “pipes” as well as the programming that flows through them. The model is what

AT&T
Inc.

is trying to build through its $85 billion pursuit of

Time Warner
Inc.

Fox, which currently owns 39% of Sky, in December 2016 launched a bid to take full control of the British company. The deal has faced a series of regulatory hurdles. In a preliminary finding earlier this year, U.K. antitrust authorities said Fox’s full ownership of Sky and its Sky News operations would give Fox Executive Chairman

Rupert Murdoch

too much influence in British media.

The Murdoch family controls a 39% voting interest in both Fox and in

News Corp
,

which publishes major British newspaper including the Sun, the Times of London and the Sunday Times. News Corp also owns The Wall Street Journal.

Fox said in February it would create an independent board for Sky News, and fund the business for five years, to win regulatory support. Fox sweetened the offer on Tuesday.

Fox said it could sell Sky News to Disney. Alternatively, it said it could establish Sky News as a separate company within the bigger Sky group, with an independent board. It also pledged 15 years of guaranteed funding for the news channel.

“The enhanced firewall remedies we proposed to safeguard the editorial independence of Sky News addressed comprehensively and constructively the [regulators’] provisional concerns,” Fox said.

Disney didn’t immediately return a request for comment. The British antitrust regulator, the Competition and Markets Authority, wouldn’t comment on the Fox proposals.

The authority has until May 1 to make a final recommendation to the U.K. government, which then must decide whether to back the Fox-Sky deal, approve it with conditions or reject it.

Even with government approval, the Fox-Sky deal isn’t certain. At least 75% of Sky’s shareholders, not including Fox, need to support the takeover, which faces competition from Comcast.

In February, Comcast announced plans to bid £22.1 billion ($31.04 billion), or £12.50 a share, for all of Sky, well above Fox’s offer of £10.75 a share.

Sky currently trades higher than the Comcast proposal, indicating that investors are expecting a bidding war. Hedge fund Elliott Management Corp. has been gradually increasing its stake in Sky, most recently to 2.8% on March 27. Sky shares were up 2% at £13.25 in afternoon trading in London.

Write to Ben Dummett at ben.dummett@wsj.com and Stu Woo at Stu.Woo@wsj.com



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