Sky clear for Fox or Comcast takeover battle as Culture Sec gives nod

Culture Secretary Matt Hancock told parliament on Tuesday that Comcast's proposed £22bn all-cash acquisition offer for Sky was clear to go, raising no public interest concerns, as he had suggested last month.

As for Fox's bid, over which the Competition & Markets Authority had objected on media plurality concerns due to the Murdoch family's ownership of Fox together with the Sun, the Times and the Sunday Times under the News Corp umbrella.

Following the CMA's proposal Sky News be divested to Disney, as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, Hancock said this was "likely to be the most proportionate and effective remedy for the public interest concerns that have been identified".

The DCMS Secretary said while Fox had written to confirm its willingness to comply with divestment terms suggested by the CMA, "there are some important issues on the draft undertakings which still need to be addressed", including that these final undertakings ensure that Sky News "remains financially viable over the long-term, is able to operate as a major UK-based news provider and is able to take its editorial decisions independently, free from any potential outside influence".

As a result, DCMS officials are in talks with the companies to reach "an acceptable form" of this potential remedy.

Following the required 15 days of formal consultation on the undertakings, Hancock said he aimed to publish this consultation within a fortnight.

"I am optimistic that we can achieve this goal, not least given the willingness 21st Century Fox has shown in developing these credible proposals. However, if we can’t agree terms at this point, then I agree with the CMA that the only effective remedy now would be to block the merger altogether. This is not my preferred approach."

In its response, the Sky board's independent directors made that point that they "are mindful of their fiduciary duties and remain focused on maximising value for Sky shareholders", having in April withdrawn their recommendation for Fox's £10.75 offer for the 61% of Sky that it does not already own after Comcast confirmed its £12.5 per share bid.

Sky shares traded 0.5% at 1,355p around a half-hour after Hancock's speech.

"A bidding war looms of course," said Neil Wilson, chief market analyst for Markets.com, with the market price above Comcast's all-cash offer implying an increased offer is priced in already.

"But the fact that the shares are not roaring higher suggests investors are displaying some hesitation about whether Murdoch will significantly increase his offer. He may not have to - the option for Fox is to switch from the current Scheme of Arrangement to a Takeover Offer, which would allow it to use its 39% of shares in the vote.

"Then it's up to Comcast and we'll see just deep the pockets are - how badly does it want to diversify from the US and get exposure to Sky's attractive recurring revenues in Europe? The fact it thinks the deal would be accretive to free cash per share from year one suggests it can. And all this is muddied by the fact that Comcast has admitted it is in advanced stages of preparing an offer for the businesses that Fox has agreed to sell to Disney."