21st Century Fox and Sky welcomed the British government’s conditional approval Tuesday of Fox’s bid to take complete control of the European satcaster, but the prospect of a bidding war with Comcast looms, and Fox’s critics pledged to keep up their opposition to the $15-billion deal.
Fox said it has already sent British authorities its plans to offload Sky News to Disney, which is trying to buy Fox’s entertainment assets. Shedding well-regarded Sky News is a condition of the government’s approval of the Sky takeover, British culture secretary Matt Hancock told lawmakers Tuesday. He also said there were not sufficient grounds to block the deal over any alleged lack of commitment by the Murdoch family to British broadcasting standards.
“21st Century Fox welcomes today’s announcement by the Secretary of State for Digital, Culture, Media and Sport that he has cleared 21CF’s proposed acquisition of the remaining shares in Sky on broadcasting standards, as recommended by the Competition and Markets Authority,” Fox said in a statement. The company added that it “has already submitted proposed undertakings to achieve the divestiture of Sky News to Disney.”
Given the protracted scrutiny of its bid thus far, Fox said it hoped that this next step in the process would wrap up within weeks. “We note that the Secretary of State agrees with this solution and has instructed officials from the Department for Culture, Media and Sport to agree [on] final undertakings that he would be prepared to accept and consult on within the two-week timeframe….We now look forward to engaging with DCMS and we are confident that we will reach a final decision clearing our transaction.”
Comcast, which has put forward a richer offer for Sky, has not commented on Hancock’s decision that it does not have to jump through the same regulatory hoops as Fox.
For its part, Sky “welcomed the announcements” by Hancock on Tuesday but has yet to get behind either Fox’s or Comcast’s offer for the business. It had originally backed Fox’s bid, but after Comcast submitted a bigger proposal in April, it withdrew that backing and has so far avoided coming down in favor of either suitor.
“The independent directors of Sky are mindful of their fiduciary duties and remain focused on maximizing value for Sky shareholders,” Sky said in a statement, describing Hancock’s decision to green-light Fox’s bid if it unloads Sky News as “a good starting point.”
It added: “Sky also notes the Secretary of State’s final decision not to intervene on public-interest grounds in relation to the Comcast offer for Sky.”
There was no major movement in Sky’s share price following Tuesday’s developments.
Fox still faces opposition from anti-Murdoch politicians and activists. “Matt Hancock must be the last person in Britain who trusts Rupert Murdoch,” said Alex Wilks, campaign director for grass-roots group Avaaz. “It’s laughable that Murdoch’s suddenly going to hand over full control of Sky News. Murdoch’s lobbyists may have Hancock’s ear, but citizens across Britain are not going to hand over more of our media without a fight.”
Avaaz has been given the go-ahead to mount a legal challenge to Ofcom’s assessment that there were not concerns over the Murdochs as “fit and proper” owners of Sky. If that challenge is successful, it could force the media regulator to re-investigate the Fox-Sky bid.
U.S.-based Media Matters welcomed the British government’s requirement that Fox offload Sky News. “Media Matters has actively opposed 21st Century Fox’s proposed takeover of Sky, warning about the ‘Foxification’ of Sky News and the harms it would bring to the U.K.’s public debate,” said president Angelo Carusone. “I’m glad the culture secretary has heeded those warnings in making it clear that, due to the dangers associated with increased Murdoch control over the public debate, Sky News must be spun off and removed from the deal entirely before it can proceed.”
Disney, which is in line to become the new owner of Sky News and to acquire Fox’s stakes in Sky, issued a brief statement. “We welcome today’s announcement from the Secretary of State and are ready to engage in any discussions requested by the Secretary of State with respect to our undertakings,” it said.