Disney and Fox open door to higher Sky bid

According to 21st Century Fox, Walt Disney Co. could acquire Sky News and this acquisition will help smooth its proposed $15-billion takeover of satcaster Sky past British regulators. Murdoch previously planned to buy the 61 percent of Sky that Fox doesn't own to sell Fox's media businesses to Disney.

The second option would be to transfer Sky News into a legally separate entity which would then be sold to Disney after completion of 21st Century Fox's acquisition of Sky, irrespective of whether Disney's proposed acquisition of 21st Century Fox reaches completion.

Fox agreed in December 2016 to buy the 61 percent of Sky it does not already own, but the deal has been repeatedly delayed by the United Kingdom government and regulators, allowing Comcast to gate crash the deal in February.

Money-losing Sky News is the last regulatory hurdle in 87-year-old Murdoch's long campaign to buy Sky, which has grown from its United Kingdom beginnings to become Europe's biggest pay-TV group.

The Fox bid, pitched at £10.75 per Sky share, is significantly lower than the Comcast offer of £12.50. "These enhanced remedies went above and beyond what Ofcom, the expert, independent regulator on United Kingdom broadcasting, had stated would mitigate concerns around media plurality", said 21st Century Fox in a statement.

Much of its decision to propose buying Sky News lies in a desire to eventually own Sky, which has 23 million customers and holds lucrative broadcast rights to the English Premier League and other professional soccer leagues.

"21st Century Fox's proposed remedies on Sky News should be enough to overcome the CMA concerns on news plurality over Fox's bid for Sky", said Ian Whittaker, an analyst at Liberum Capital, in a first reaction.

Disney announced a $52.4bn deal to buy Fox's entertainment assets last December, including Fox's current 39 per cent stake in Sky.

The group, which has a broadband arm serving 29 million USA customers, owns NBC and Universal Pictures and wants to seize more than 50 per cent of Sky.

The agency is considering whether to recommend the Fox deal for Sky to Culture Secretary Matt Hancock for approval.

"They've now gone as far as to persuade Disney to buy a lossmaking business, because everyone knows Sky News doesn't make any money", he said.

Sky also said the proposals would address regulatory concerns. A surprise offer for Sky from Comcast, the United States cable group, at a premium to the Fox offer has further complicated the picture.

The CMA, which published the Fox concessions in full on Tuesday, is conducting a review and will submit a final report to the British government on May 1.