Rupert Murdoch’s efforts to buy Sky have been derailed after US cable giant Comcast swooped in with a £22billion counter-bid.
The formal offer from the American firm which owns Hollywood studio Universal came two months after it said it was interested in Sky.
Its bid is 16 per cent higher than one tabled by Murdoch’s 21st Century Fox.
Minutes after the counter-bid was published, Sky dropped its support for Fox’s earlier offer and said it would now engage with both suitors.
New bidder: Universal Studios owner Comcast swooped in with a £22billion counter-bid for Sky
The decision would have been made by Martin Gilbert, the deputy chairman of Sky, which is chaired by James Murdoch, who has had to step away from normal duties to avoid conflicts of interest.
Comcast’s hijacking of the deal sets the stage for a blockbuster bidding war that will pit some of the entertainment world’s most powerful bosses against each other.
Comcast is a daunting opponent even for the Murdochs.
Worth about £117billion, it is one of America’s biggest companies and owns television network NBC and supplies broadband and pay-TV services to millions of homes.
Fox is desperate to clinch a takeover of Sky, which has been delayed by tough scrutiny from regulators, so it can complete a separate £39billion deal to sell most of its assets to Disney.
But Comcast has now offered 1250p per share for Sky, gazumping the 1075p offered by Fox for the 61 per cent of shares it doesn’t already own.
Reaching For Sky
- £22bn – Universal owner Comcast’s offer for Sky – 16 per cent more than 21st Century Fox had offered
- 23m – Customers of Sky – the majority in UK, Germany and Italy
- £117bn – The value of Comcast which owns Universal, NBC and is America’s biggest cable TV network
Comcast chief executive Brian Roberts said Sky was an outstanding company that would allow it to expand into Europe and make combined savings of £360million.
Showering praise on the firm, he promised to protect the independence of Sky News and said Comcast would be retaining the firm’s west London headquarters and its technology campus in Leeds. ‘Limited’ job cuts were expected, he warned.
‘We will be an entertainment company with the resources to compete, grow and thrive in a very rapidly changing world,’ said Roberts.
Fox said it was considering its options, adding: ’21st Century Fox remains committed to its recommended cash offer for Sky.’
The company already owns 39 per cent of Sky and has been trying to buy the rest since December 2016, with the deal dogged by regulatory concerns about what will happen to the Sky News channel.
This is because Murdoch owns the Sun, Times and Sunday Times newspapers, with the Competition and Markets Authority fearing it could give the tycoon too much influence over the UK’s media.
In a bid to put the concerns to rest, Fox has proposed measures to guarantee the editorial independence of Sky News.
All Star Cast In Takeover Drama
Martin Gilbert, deputy chairman, Sky – The 62-year-old holds sway over who shareholders should back. Yesterday he ditched the Fox bid – dealing a blow to the Murdochs including his own chairman James
Brian Roberts, chairman, Comcast – The tycoon, 58, decided to bid for Sky after watching a demonstration of its latest television set-top box and yesterday weighed in with a bumper offer
THE MEDIA TYCOON
Rupert Murdoch, chairman, 21st Century Fox –The 87-year-old had hoped the bid for Sky, and subsequent £39bn sale of Fox to Disney, would secure his legacy-that’s now been scuppered
THE HOLLYWOOD MOGUL
Bob Iger, chairman, Disney – Wanted to snap up 21st Century Fox before stepping down from Disney, having put off retirement three times already. He called Sky the ‘crown jewel’ of the Fox deal and must now decide if he wants to put up more cash to buy it
Comcast has done the same in its own bid, to pre-empt any such objections, although it has little presence in the UK and is not expected to attract the same scrutiny from the Government.
But the deal has taken on more urgency for Fox in recent months after Murdoch agreed to sell most of its entertainment assets, including its holding in Sky, to Disney for £39billion.
Analysts said Comcast’s move yesterday meant Murdoch would now have to choose between raising his offer for Sky or admitting defeat and taking the firm out of the deal with Disney.
Shares in Sky jumped 3.9 per cent, or 51p, to 1359p yesterday – more than both the current offers for it – suggesting investors are expect a higher final price.
George Salmon, an analyst at Hargreaves Lansdown, said: ‘There’s a distinct possibility of a bidding war.’
Those set to profit include several hedge funds, including Baupost Group, Elliott Management and DE Shaw & Co, who have piled in to Sky.
An independent panel headed by Gilbert will examine the rival offers and make a recommendation to shareholders.
‘The committee is mindful of its fiduciary duties and has consistently sought to maximise value for all shareholders,’ Sky announced yesterday.
‘At this time, it notes that both offers are subject to preconditions and neither offer is currently capable of being put to shareholders.
‘The committee intends to co-operate fully with both parties to secure the relevant approvals in order to satisfy the preconditions for both offers.
‘Until the relevant preconditions are satisfied, Sky shareholders are advised to take no action.’
The Tangled Takeover
21ST Century Fox currently owns 39 per cent of Sky. It launched a £11.7billion bid to buy the remaining shares in December 2016.
Then in December 2017, Murdoch struck a separate deal to sell most of Fox, including Sky, to Disney for £39billion.
Two months later US cable giant Comcast said it planned to make an offer for Sky, and yesterday tabled a £22billion counter-bid.
Sky has now dropped its support for Fox, and is courting both suitors.