A day after both 21st Century Fox and Comcast escalated a bidding war for control of Sky, Britain on Thursday finally approved Fox’s offer to buy the remaining 61 percent of the European pay TV giant it doesn’t already own.
“It is now a matter for the Sky shareholders to decide whether to accept 21st Century Fox’s bid,” Culture and Media Secretary Jeremy Wright said.
Comcast on Wednesday raised its bid for Sky to about $34 billion (£14.75 per share), in response to Fox’s raised bid earlier in the day to about $32.5 billion (£14.00 per share). Fox’s latest offer was more than 30 percent higher than its initial bid back in December of 2016.
Comcast also announced that Sky’s independent committee of directors already recommended Comcast’s new offer. The company noted its offer has already received regulatory approval in the “EU, Austria, Germany, Italy and Jersey,” and expects the deal to close before the end of October.
The Sky battle wages on as another fight, for Fox itself, continues between Comcast and Walt Disney. In June, Disney made a renewed $71.3 billion bid for Fox’s entertainment assets (including the 39 percent stake in Sky), topping Comcast’s $65 billion offer. A Fox shareholder vote on that deal is slated for July 27, and BTIG Research media analyst Richard Greenfield said in a Wednesday post that the firm thinks Comcast must submit a revised bid by July 20 to give the Fox board enough time to consider a renewed offer.
Disney also appears motivated to gain full control of Sky, which has more than 22 million customers, with Disney CEO Robert Iger calling the asset a “real crown jewel” of the Fox-Sky acquisitions.
Recent news reports have suggested Comcast’s swift counter-bid for Sky indicates that the company will stop its pursuit of Fox to focus on purchasing Sky, or at least hold off on a renewed bid for the Fox assets until the outcome of a Sky deal is clearer, but analysts are skeptical.
“What makes that [Comcast holding off on renewed Fox bid] hard to understand time-wise is that the Sky process is not moving as fast as Fox,” Greenfield wrote Wednesday. “Fox could wait until after the Disney/Fox shareholder vote to move its bid for Sky higher as they are not under time pressure to respond to Comcast’s bid immediately.”
Jeffries analysts too, think Comcast is not done with Fox’s entertainment assets.
“We continue to believe Comcast ultimately wants both Sky and Fox assets, and that Comcast will come in with a higher bid for Fox in the coming weeks (prior to the 7/26 shareholder vote,” Jeffries analyst John Janedis wrote in a Thursday note to investors.
Giving up on Fox may also not be good for Comcast in the long-run, according to Greenfield.
“Comcast allowing Disney to buy Fox while they buy Sky means that Comcast loses out on all of the global assets within Fox beyond Sky such as Latam and Star in India, not to mention, Disney’s film and TV prowess with 21st Century Fox would dwarf Universal Studios,” Greenfield noted. “It is hard to see how that is a positive for Comcast long-term.”