Disney offers to buy Sky News to aid Fox bid for broadcaster

Rupert Murdoch has signalled he's open to cede his battle to acquire the UK's Sky News channel to Walt Disney, in an attempt to appease regulators as he seeks control of the wider Sky media group.
21st Century Fox is bolstering efforts to secure the Sky News takeover after Comcast Corp in February 2018 made a competing offer for the UK pay-TV company.
21st Century Fox is bolstering efforts to secure the Sky News takeover after Comcast Corp in February 2018 made a competing offer for the UK pay-TV company.PHOTO: REUTERS

LONDON (BLOOMBERG) - Walt Disney offered to buy Sky News to help Mr Rupert Murdoch's 21st Century Fox win over UK regulators reviewing Fox's £11.7 billion (S$21.6 billion) acquisition of broadcaster Sky Plc.

Disney is interested in acquiring Sky News regardless of whether its larger US$52.4 billion (S$68.6 billion) takeover of most of Fox goes through, guaranteeing the editorial independence of the operation, Fox said in a submission to the UK's Competition and Markets Authority.

Alternatively, New York-based Fox could set up Sky News as a separate company with independent governance to ensure its journalistic integrity, the filing shows.

Fox is bolstering efforts to secure the Sky takeover after Comcast Corp in February made a competing offer for the UK pay-TV company.

Acquiring the 61 per cent of Sky that Fox does not own is part of Mr Murdoch's broader plan to sell Fox's media businesses to Disney. He is already been foiled once in his effort to buy the stake: He dropped a £7.8 billion Sky bid in 2011 after a phone-hacking scandal at Mr Murdoch's newspapers sparked a political backlash.

This time around, UK regulators have worried that a takeover of Sky would give Mr Murdoch - whose News Corp owns The Times, The Sunday Times and The Sun newspapers - too much sway over British media.

Fox had previously proposed a separate editorial board to insulate Sky News and in March sweetened the offer, proposing a 10-year funding guarantee for the UK's oldest 24-hour news service.

On Tuesday (April 3), Fox's offer to legally separate Sky News came with an enhanced guarantee of 15 years.

"We have proposed a set of solutions that address and resolve any and all questions or concerns that may have been raised by the transaction," Mr Gerson Zweifach, Fox's general counsel, said in an emailed statement.

"We look forward to concluding this acquisition - finally - in a timely and expeditious manner."

Fox's offer with Disney is likely to be enough to address the CMA's concerns and paves the way for a higher bid from Fox for Sky, said Mr Ian Whittaker, a media analyst at Liberum in London, in an interview on Bloomberg TV.

"If you look at what Fox has announced, it would suggest it's still very much serious about the bid," he said. "The key thing now is: who's going to bid the most for Sky?"

Comcast's offer for Sky of £12.50 a share exceeds the £10.75 bid by Fox. Sky shares rose 1.3 per cent to £13.15 at 11am in London.

The competition watchdog is expected to give its verdict on Fox's Sky bid by May 1, leaving the final decision on whether to approve the deal to Culture Secretary Matt Hancock by mid-June.

Disney's offer to buy the money-losing channel irrespective of its wider bid for Fox is a gamble, given that Disney's acquisition of Fox is yet to clear regulators and the US entertainment company has little experience of running news businesses in the U.K.

In a statement, Burbank, California-based Disney said it would "sustain the operating capital of Sky News and maintain its editorial independence".