NWS News Corporation

By Stu Woo 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 20, 2018).

LONDON -- The U.K. government has all but given Rupert Murdoch's 21st Century Fox Inc. permission to partake in a bidding war for British pay-TV giant Sky PLC, clearing one of the last obstacles for a corporate takeover battle that also includes Walt Disney Co. and Comcast Corp.

British Culture Secretary Matt Hancock earlier this month indicated he would approve Fox's $15 billion bid to buy the 61% of Sky it doesn't already own, on the condition that Fox sell Sky's news channel if its bid succeeds. On Tuesday, Mr. Hancock said he approved of Fox's sweetened proposal to sell the channel to Disney, which itself is trying to buy the majority of Fox. The government blessing came after Fox pledged to fund a Disney-owned Sky News channel for 15 years, up from its previous proposal of 10 years, for at least GBP100 million ($132 million) a year.

Formal approval is now expected after a 15-day period for feedback.

The U.K. government was concerned that Fox's full ownership of Sky would give Mr. Murdoch and his family too much influence in British media. Mr. Murdoch and his family are major shareholders in both Fox and News Corp, which publishes three U.K. newspapers as well as The Wall Street Journal.

The expected green light from the U.K. sets up a complicated bidding war for Sky. On one side is Fox and Disney, which has proposed buying most of Fox -- including its 39% Sky stake -- in a $52 billion all-stock deal. On the other side is cable giant Comcast, which in February launched its own $29 billion to buy all of Sky, offering GBP12.50 ($16.47) a share. That is higher than Fox's GBP10.75 proposal. In addition, Comcast last week topped Disney's offer for Fox assets with a roughly $65 billion cash offer.

Both Disney and Comcast are trying to increase their international footprints, and both have said they consider Sky one of Fox's most appealing assets.

Operating in seven European countries, Sky is a smaller version of what U.S. media companies are trying to become: a telecommunications provider that also owns the programming that flows through its airwaves and wires. Sky sells phone, TV and internet services, and it also produces its own sports, entertainment and news programming.

The possibility of vertically integrating communications services with content drove AT&T Inc.'s $85 billion purchase of Time Warner Inc., and analysts say the recent court approval of that merger may lead to more deals just like it.

In addition to the 15 years of Fox funding a Sky News channel, the government also said Disney must formally commit to preserve the news operation's editorial independence, and that Disney would require government approval to sell the news business within 15 years.

Fox and Sky said in separate statements that they welcomed the U.K. government's announcement.

Write to Stu Woo at Stu.Woo@wsj.com

(END) Dow Jones Newswires

June 20, 2018 02:47 ET (06:47 GMT)

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