21st Century Fox will offload its longtime 39% stake in Sky to Comcast for more than $15 billion, after the U.S. cable giant lodged the highest bid in a weekend auction of the European pay-TV heavyweight.
Fox said Wednesday it would accept the £17.28-per-share offer Comcast made in the auction, which clears the way for Comcast to take full control of Sky.
The deal values Fox’s stake at £11.6 billion ($15 billion). The sale will mark the end of an era for Sky and its association with Rupert Murdoch, who is set to become a major shareholder in Disney instead by virtue of a separate deal for Fox assets. Murdoch had long wanted to own Sky and came close to buying out the company, then known as BSkyB, in 2011, before the phone-hacking scandal in Britain sank that effort.
“In light of the premium Comcast has agreed to pay for Sky, we and Disney have decided to sell 21CF’s existing 39% holding in Sky to Comcast,” Fox said in a statement. “We congratulate Comcast on their pending acquisition. We are proud of the role our company has played in building Sky, and of the outstanding value we have delivered for shareholders of 21CF and Sky, and customers across Europe.”
Fox added that, when it launched Sky in 1989, “it was four channels produced from a prefab structure in an industrial park on the fringes of West London….We bet – and almost lost – the farm on launching a business that many didn’t think was such a good idea. Today, Sky is Europe’s leading entertainment company and a world-class example of a customer-driven enterprise.”
Sky CEO Jeremy Darroch paid tribute to Fox and Rupert Murdoch. “Nearly 30 years ago, Rupert Murdoch took a risk to launch Sky and in the process changed the way we watch television forever,” he said. “His vision and belief has enabled us to grow in to Europe’s leading direct to consumer media business and I would like to personally thank him, James [Murdoch] and 21CF for their consistent support as shareholders, board members and friends.
“On behalf of all our employees I would also like to thank James for his chairmanship as we have transformed Sky over the past decade. With 21CF announcing its intention to sell its shares to Comcast we close one chapter while simultaneously opening another. Our aim is to make the next 30 years as exciting for customers, colleagues and all our stakeholders.”
Disney, which has struck a deal to buy a raft of Fox assets including the stake in Sky, said it had given Fox its approval to sell. Disney had been expected to use its Sky holdings as leverage for some Comcast assets, such as Comcast’s stake in Hulu. But it is opting to cash out the shares instead – at a premium rate that it and Fox helped drive up by bidding against Comcast to buy Sky.
The sale of the shares, “coupled with the divestiture of the Fox Sports Regional Networks, will significantly reduce the amount of debt Disney will incur in acquiring 21st Century Fox, and enable Disney to maintain its strong balance sheet as it continues to invest in content creation for its direct-to-consumer platforms,” Disney said.
Sky is swapping one U.S. backer for another, albeit soon-to-be-owner Comcast looks set for full ownership of the 23-million subscriber platform. Comcast beat Fox in the battle for Sky with a significantly higher bid for the company in last weekend’s blind auction. It has proceeded to buy Sky stock on the open market. Sky shares were trading at £17.27 late Wednesday.
Analysts have already speculated that the deal will pave the way for content and tech partnerships between the various units of Sky and Comcast, which also owns NBCUniversal.