Sky backs away from Murdoch as Comcast makes £22bn cash bid

Independent directors welcome new offer and say they will engage with both bidders

Comcast said it wanted Sky to be its platform for European growth. Photograph: PA Wire

Comcast said it wanted Sky to be its platform for European growth. Photograph: PA Wire

 

Comcast, America’s largest cable company, submitted a £22 billion (€25.2 billion) bid for Sky on Wednesday, prompting the European pay TV group to drop its support for a lower offer from Rupert Murdoch’s Twenty-First Century Fox.

Sky’s independent directors welcomed Comcast’s £12.50 per share bid and said they would now engage with both Comcast and Fox.

They cautioned that neither bid could yet be put to shareholders and advised them to take no action for now.

Fox, which already has a 39 per cent stake in Sky, first announced its £10.75 per share cash offer in December 2016. The deal has been held up by concerns about the influence Mr Murdoch could wield over public opinion through owning all of the broadcaster as well as British newspapers including the Times and the Sun.

The proposed combination has been further complicated by Fox’s agreement to sell many of its TV and film assets to Disney, including its stake in Sky, for $52 billion.

On Wednesday, Sky also welcomed commitments the US cable giant had made to address potential public-interest concerns over Sky News, its influential 24-hour news channel.

“As a result of the announcement of this higher cash offer, the independent committee is withdrawing its recommendation of the offer announced by 21CF [Twenty-First Century Fox] on 15 December, 2016, and is now terminating the co-operation agreement entered into with 21CF on the same date,” Sky said in a statement.

Comcast’s chairman and chief executive Brian Roberts said Sky withdrawing its recommendation was what it wanted to achieve by formalising its offer on Wednesday.

“The board confirming they are going to focus on the shareholders, that’s the perfect step as far as we are concerned today,” he told reporters.

Sky is chaired by Murdoch’s son James, who played a key role in building the company into a major European broadcaster with operations in Germany, Austria and Italy as well as Britain.

Sky formed a committee of independent directors to consider the bids, given James Murdoch’s role as chief executive of Fox.

Sky shares rose 3.5 per cent to £13.54 in London by lunchtime Wednesday – well above the offer price, implying that some shareholders anticipated a bidding war.

Fox said it remained committed to its cash offer for Sky and was considering its options.

Comcast, which owns Universal Pictures and NBC, said it had formalised its offer to coincide with its own results, giving it an opportunity to explain to investors the merits of the bid. Its quarterly earnings topped Wall Street expectations on Wednesday. – Reuters