New undertakings by 21st Century Fox in Sky takeover bid

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Sky News has received a 15-year funding commitment from entertainment giant Disney in the latest twist in the takeover battle for parent company Sky.

Disney committed to funding Sky News to the tune of at least £100m a year, for the next 15 years, as well as agreeing to protect its operating costs in real terms.

That is up from the 10-year funding guarantee it had offered previously.

Disney will also be restricted from selling Sky News for 15 years without the agreement of the culture secretary and, in addition, gave a formal commitment to preserve the editorial independence of Sky News.

The agreement has been accepted by Matt Hancock, the current culture secretary, potentially paving the way for a takeover of Sky by 21st Century Fox – which eventually intends to sell the broadcaster on to Disney.

Mr Hancock said two weeks ago that Fox would be allowed to buy Sky if it agreed to sell Sky News in advance.

And he said any buyer would have to guarantee that Sky News remained financially viable, continued to operate as a major UK-based news provider and was able to make editorial decisions independently and free from any potential outside influence.

Disney and Fox. Pic: Coolcaesar New undertakings by 21st Century Fox in Sky takeover bid New undertakings by 21st Century Fox in Sky takeover bid skynews disney fox studios 4182511
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Disney wants to buy the entertainment assets of Fox, which is Sky’s largest shareholder. Pic: Coolcaesar

He said on Tuesday: “In my view, these revised undertakings meet the criteria that I set out to the House on 5 June and will help to 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.”

Mr Hancock is now obliged to consult formally for 15 working days on the commitments made by Disney which, he said, he proposed to accept.

That consultation ends on 4 July and it is widely expected that Mr Hancock will then give Fox the green light to bid for Sky.

Sky, including Sky News, is one of a number of entertainment assets that Fox agreed to sell to Disney for $52bn just before Christmas last year.

LONDON, ENGLAND - JANUARY 08:  Matt Hancock arrives at 10 Downing Street as Prime Minister Theresa May reshuffles her cabinet on January 8, 2018 in London, England. Today's Cabinet reshuffle is Theresa May's third since becoming Prime Minister in July 2016 and was triggered after she sacked first secretary of state and close friend Damian Green before Christmas.  (Photo by Leon Neal/Getty Images) New undertakings by 21st Century Fox in Sky takeover bid New undertakings by 21st Century Fox in Sky takeover bid skynews matt hancock tory mp 4201161
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Culture Secretary Matt Hancock

Comcast, the US cable TV giant, last week tabled a rival $66bn all-cash offer for those assets.

Fox, which is already Sky’s biggest shareholder with a 39.1% stake, first tabled a proposal in December 2016 to buy the remainder of the broadcaster for £11.7bn in a deal valuing the whole of Sky at £18.5bn.

The takeover has been held up by a series of regulatory investigations, first by Ofcom, the telecoms and media regulator, and then by the Competition & Markets Authority.

In the meantime, Comcast has emerged as a rival buyer for Sky, tabling a £22.1bn takeover bid.

The new commitments from Disney represent a significant improvement on its previous pledges.

It said at the beginning of April that it would continue funding Sky News for five years at the present level and for a further five years at a level “not materially different” from now.

Comcast said its bid came with a series of legally binding commitments on Sky ownership and UK investment New undertakings by 21st Century Fox in Sky takeover bid New undertakings by 21st Century Fox in Sky takeover bid skynews comcast nbc 4292245
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Comcast has emerged as a rival buyer for Sky

Now, in a funding commitment without precedent in the UK media industry, it is effectively agreeing to pump at least £1.5bn into the news provider for the next 15 years.

Comcast has also offered commitments to guarantee the funding and editorial independence of Sky News.

Shares of Sky, which were valued at 1075p each under the original Fox bid and at 1250p under the Comcast bid, were up 1p at 1338.5p at 3.55pm BST – indicating that the market expects Fox to come back with a sweetened offer.

Sky’s board is not currently recommending either the Fox or the Comcast offer to its shareholders.

Sky said this afternoon that it welcomed Mr Hancock’s statement.

It was also welcomed by Fox, which added: “Under the final proposal submitted by 21st Century Fox, Sky News would be divested to Disney following the close of the Sky transaction… we now look forward to a final decision clearing our transaction.”



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