Rupert Murdoch’s 21st Century Fox has moved to take full control of Sky, five years after the phone hacking scandal derailed its first attempt, in an approach valuing the UK pay-TV group at £18.5bn.
The £10.75-a-share all-cash proposal for the 61 per cent of Sky that Fox does not already own would be one of the biggest acquisitions of a British company since June’s Brexit vote and comes as weakness in the pound has made UK targets cheaper for overseas buyers.
Unlike its 2010 bid, which collapsed in 2011, the US media group has secured Sky directors’ approval for the offer price. The valuation represents a 40 per cent premium to Sky’s closing share price on Tuesday – the day before Fox’s initial approach. If approved, the deal would cost Fox around £11bn. Sky’s share price closed up 27 per cent at £10.
The move comes amid a new phase of media consolidation driven by changes in distribution technologies and audience viewing habits. Like AT&T’s recent $86bn offer for Time Warner, a combined Fox-Sky would unite a content producer with a distributor that has satellite, broadband and mobile connections to millions of consumers. In 2014, Fox tried but failed to buy Time Warner.
Fox said the move would bring together its global content business with Sky’s “direct to consumer capabilities”. It added that it has regularly stated its existing 39.1 per cent stake in Sky was “not a natural end position”.
In 2010, Fox was part of Mr Murdoch’s News Corp empire, which launched a £7.8bn bid for the whole of Sky but abandoned its pursuit a year later amid a political outcry over News Corp journalists’ illegal access of the phone messages of celebrities, politicians and Milly Dowler, a murdered schoolgirl.
The deal will pose the first big test of UK media regulation since Theresa May became prime minister. During the first Sky swoop, then culture secretary Jeremy Hunt sought editorial independence pledges from the bidder, in an effort to stem fears over media plurality. With Fox separated from News Corp’s newspapers, which include The Sun and The Times, it is unclear whether the move will face the same plurality tests.
Sky said it had formed an independent committee to evaluate the proposal. It does not include members of the Murdoch family, which controls Fox. James Murdoch, Mr Murdoch’s son, was reinstalled as Sky chairman in April.
Additional reporting by Kate Allen and Anna Nicolaou
