Rupert Murdoch's Sky bid challenged by Comcast

Image copyright Sky

US cable TV giant Comcast has made a £22.1bn bid for Sky, challenging an existing offer from 21st Century Fox.

Rupert Murdoch’s 21st Century Fox had already agreed an £18.5bn deal to buy the 61% of Sky it does not already own.

Comcast is the biggest US cable TV firm. It also owns the broadcast TV network NBC and Universal Pictures.

Comcast chief executive Brian Roberts called Sky "an outstanding company" and said he was "confident" the offer would be cleared by regulators.

Mr Roberts added that the UK "is and will remain a great place to do business" and that Comcast wanted to "use Sky as a platform for our growth in Europe".

Shares jump

Comcast said Sky News was "an invaluable part of the UK news landscape", and it intended to "maintain Sky News' existing brand and culture".

Mr Roberts added: "We would like to own the whole of Sky and we will be looking to acquire over 50% of the Sky shares".

Comcast said its bid of £12.50 a share was 16% higher than the 21st Century Fox offer.

Sky's shares jumped more than 18% to above £13 in early trading on the London Stock Exchange.

Fox's Sky bid has not been viewed favourably by the UK's competition authority, which in January provisionally found that it would not be in the public interest.

The Competition and Markets Authority is concerned that if the deal went through, the Murdoch Family Trust would have too much influence over public opinion and the political agenda.

Last week, 21st Century Fox said it would keep Sky News running for at least 10 years, with a fully independent board for the channel, to try to make the proposed deal more attractive to regulators.

The picture was made more complicated in December of last year when Walt Disney agreed to buy the bulk of 21st Century Fox's business, including its 39% Sky stake.

If that acquisition goes through, it could lessen the Murdoch family's UK influence.

Mr Roberts said that Comcast was prepared to co-own Sky with either Fox or Disney, as long as Comcast held a majority stake.

Earlier this month, Sky won the lion's share of Premier League TV rights for the football seasons between 2019 and 2022.

Comcast chief financial officer Michael Cavanagh said the Premier League auction was a factor, but not the driving force behind the offer.

Lower risk

Analysts from Liberum said there was a "very good chance" that Comcast's bid would succeed.

"We expect this deal to go through as we do not think Fox (or Disney, who are acquiring the Sky assets as part of their purchase of various Fox assets) will want to get into a bidding war, especially given the complications surrounding Sky News."

The analysts said the increased offer would be attractive to many Sky shareholders, not only because of higher bid, but also "it would come with much lower regulatory risk".

The UK government may also be "looking for an optimal way to defuse the political risks from the Fox bid," they said.

"Moreover, there is the obvious question of whether Fox would want to counterbid. After all, [the fact] it is selling its Sky stake to Disney suggests already it wants to exit at the right price," the analysts added.