×
You will be redirected back to your article in seconds

Sky’s Fate Will Be Settled Independently of Comcast-Disney’s Fox Battle (Analysis)

U.K. regulators have paved the way for 21st Century Fox to counter Comcast’s bid to buy European satellite TV provider Sky, turning up the heat on the simmering M&A battle between Comcast and Disney over major 21st Century Fox assets.

The jousting among Comcast and Fox during the past few months over Sky has been seen as a warm-up for the larger fight between Comcast and Disney over the bulk of 21st Century Fox’s TV and entertainment assets.

With Tuesday’s regulatory decision in the U.K., Fox now has a clear path to sweetening the $15 billion offer it made in December 2016 to buy out the remaining 61% of Sky that it does not already own. In April, Comcast fielded an all-cash deal for Sky that values the satcaster at about $31 billion. Fox is expected to raise its offer now that it is clear regulators will allow the deal to proceed with some conditions, including the sale of the Sky News operation.

Tuesday’s decision was also good news for Comcast as regulators decided the U.S.-based media giant will not face the stricter regulatory scrutiny that Fox, with all of the Murdoch family’s investments in the U.K. and Europe, has faced during the past 18 months. It’s unclear how much higher Comcast is willing to go, however, if Fox comes back with a significantly higher offer.

The dynamics around the bidding for Sky are complicated by the fact that Comcast is on the verge of launching an all-cash offer to top Disney’s all-stock $52.4 billion bid for most of 21st Century Fox’s assets, including its 39% interest in Sky. Comcast is awaiting the decision, expected on June 12, in the anti-trust trial over the AT&T-Time Warner merger before formally launching its counteroffer for the 21st Century Fox assets. However, all indications from Comcast are that the counteroffer is a go barring a draconian anti-M&A decision from the federal judge overseeing AT&T-Time Warner.

With a big war chest and ambition to grow internationally, Comcast’s run at Sky has been seen as a precursor for the bigger battle to come. But the sale of Sky is a complicated pursuit in and of itself, and the decisions will be made by an independent board of directors that is not likely to be swayed by the macro-level Comcast-Disney battle. What’s more, with the runway cleared for a new bid from Fox, yet another bidder could emerge as it is clear the fate of Sky will be settled one way or another in the coming months.

“The gloves are now off and [it] opens up a fierce bidding war for Sky. This is a great time to be a Sky shareholder,” said Paolo Pescatore, VP of multiplay and media for research firm CCS Insight. “Furthermore, it will open up other opportunities for U.S.-based companies to buy other media assets in the U.K.”

As such, Sky’s board has no incentive to rush into a deal with either Fox or Comcast. The decision confirmed Tuesday by British culture secretary Matt Hancock sets up a 14-day period for Fox to finalize the details of the conditions laid out by regulators to allow it to move forward in revising its bid for Sky. The Sky board has a bird in the hand with Comcast’s richer offer, but knowing that Fox will come back for round two gives them a fiduciary obligation to wait and see how Fox responds.

If Sky opts to take Fox’s offer, the deal would be subject to a fresh round of public comments on a proposed transaction per the protocol of Ofcom, the British media regulatory body. There would not be a public comment period if Sky were to proceed with Comcast.

Comcast could wind up owning Sky before the fate of the larger Fox deal is determined if Sky opts to accept Comcast’s standing offer. But if Sky goes with Fox, Comcast could still ultimately wind up with Sky if the cable giant is successful in landing the larger 21st Century Fox deal. On the flip side, Disney could decide to make its own bid for all Sky. At present, Disney’s acquisition agreement with 21st Century Fox expressly prevents Disney from taking a run on its own for Sky, but those terms could always be revised.

“This is just a skirmish ahead of bigger battles, as Comcast and Disney fight for Sky and, ultimately, Fox itself,” said Adam Thomas, lead analyst for global TV markets at Ovum.

What makes the situation even more dizzying is that the M&A skirmishes among Disney and Fox are driven by the pressure they feel to bulk up to better compete with the growing global clout of tech giants a la Facebook, Apple, Amazon, and Netflix.

“Traditional media companies are increasingly forming themselves into corporate giants, as they seek the scale they need to meet relentless competition from the giant digital platforms,” Thomas said.

More TV

  • TV Shows to Watch the Week

    TV Shows to Watch the Week of April 22, 2019: 'Gentleman Jack' and the NFL Draft

    Welcome back to Tune In: our weekly newsletter offering a guide to the best of the week’s TV. Each week, Variety’s TV team combs through the week’s schedule, selecting our picks of what to watch and when/how to watch them. This week, “Gentleman Jack” debuts on HBO, and “Kobra Kai” season two drops on YouTube [...]

  • Steve Golin The Revenant Spotlight Producer

    Steve Golin, Prolific Producer and Founder of Anonymous Content, Dies at 64

    Steve Golin, an Oscar-winning producer who was founder and CEO of Anonymous Content, has died of cancer. He was 64. Golin was a pioneer in blending the business of talent management with production. Anonymous Content, which Golin founded in 1999, worked with a stable of big name artists such as Steven Soderbergh, Emma Stone, Edgar [...]

  • The Iron Throne, which has been

    'Game of Thrones': Six Books for Fans to Read

    As the final season of “Game of Thrones” draws to a close, we’ve found six best-selling books that keep the stories of Westeros and beyond alive. From the original novels that inspired the hit HBO show, to collectible tomes that highlight behind-the-scenes secrets, these books make a great addition to your bookcase, whether you’re a [...]

  • CBS Sports, WNBA Strike TV Deal

    CBS Sports, WNBA Strike TV Deal

    CBS Sports and the WNBA struck a new deal to televise some of the league’s games, widening exposure for professional women’s basketball in the U.S. Under terms of the deal, CBS Sports Network will broadcast 40 live WNBA games in primetime and on weekends, starting Saturday May 25 as the league’s 2019 season gets underway. [...]

  • Robin Roberts Omarosa

    Disney Makes Big Play to Stay in NFL's TV-Football Game

    Robin Roberts is moving this week from mornings on ABC to primetime. And while the shift is temporary, the business machinations behind it are likely to continue. Roberts, best known for her regular appearances on “Good Morning America,” will serve this Thursday as an important presence during two nights of ABC’s coverage of the NFL [...]

  • TV Review: ‘Motown 60: A Grammy

    TV Review: ‘Motown 60: A Grammy Celebration’

    If nothing else, CBS’ “Motown 60: A Grammy Celebration” special alerted America to the continued vitality of Smokey Robinson as a contemporary performer. Ten months from turning 80, the singer’s performances were focused and controlled as he weaved his sultry vocals through classics he wrote — the ballads “The Tracks of My Tears” and “Ooh Baby Baby,” chief among them. Producers [...]

  • Telemundo Has 'Game of Thrones' Hopes

    Telemundo Has 'Game of Thrones' Hopes for 'La Reina del Sur' Season 2 Premiere

    Call it Telemundo’s “Game of Thrones.” The Spanish-language network is hoping for a blockbuster premiere tonight for the long-awaited sophomore season of “La Reina del Sur,” the crime drama starring Kate del Castillo that ranks as Telemundo’s most-watched original series ever. “La Reina” was a massive hit for Telemundo when it aired in early 2011. [...]

More From Our Brands

Access exclusive content