September 26, 2018
Rupert Murdoch is a sly fox. After his 21stCentury Fox media company lost to Comcast in a weekend auction for outstanding control of Sky Plc., the media tycoon has agreed to sell Fox’s 39% stake (worth about $15 billion) in the British satellite TV distributor to Comcast – at the new elevated share price of £17.28 ($22.60).
To do so, Fox had to get Disney’s approval after the latter acquired select Fox assets, including 20thCentury Fox Film and Fox’s stake in Sky, for $71 billion.
After Comcast emerged victorious last weekend in a special auction held by British regulators – an event that saw Comcast agree to pay nearly 70% more for Sky than Fox had original offered, fiscal common sense prevailed over ego.
In a statement, Fox said it wished its colleagues at Sky well going forward. Murdoch helped launch Sky in 1989 through the merger of Sky Television and British Satellite Broadcasting.
“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. We congratulate Comcast on their pending acquisition,” said Fox.“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.”
For Disney, the transaction, coupled with the divestiture of the Fox Sports Regional Networks, significantly reduces the amount of debt it would incur in acquiring Fox assets.
Disney, in a statement, said it would rather focus its “considerable investment” in the branded direct-to-consumer offering launching in late 2019 and the new ESPN+ sports streaming service. It will also seek to increase investment in Hulu’s content offerings and international distribution. Disney and Fox each currently hold 30% stakes in Hulu.
“Along with the net proceeds from the divestiture of the RSNs, the sale of Fox’s Sky holdings will substantially reduce the cost of our overall acquisition and allow us to aggressively invest in building and creating high-quality content for our direct-to-consumer platforms to meet the growing demands of viewers,” said Disney CEO Bob Iger.
The acquisition has received formal approval from shareholders of both companies, and Disney and 21st Century Fox have entered into a consent decree with the U.S. Department of Justice that allows the acquisition to proceed, while requiring the sale of the Fox Sports Regional Networks. The transaction is subject to a number of non-U.S. merger and other regulatory reviews
For Murdoch and Co., selling Sky marks the end of an era.
When Murdoch-led Fox launched Sky nearly three decades ago, it nearly went broke operating 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,” Fox said. “Today, Sky is Europe’s leading entertainment company, a world-class example of a customer-driven enterprise … and we have created more than 31,000 jobs across the continent.”