UK Government confirms Fox can bid for Sky as long as it flogs Sky News

A protracted assessment of Twenty-First Century Fox’s desire to acquire the 60% of Sky it doesn’t already own has concluded something needs to be done about Sky News.

The concern is that giving Rupert Murdoch-owned Fox control of Sky would negatively affect media plurality in the UK because he already owns a bunch of newspapers. So the Secretary of State for Digital, Culture, Media and Sport, Matt Hancock, has concluded the acquisition process can only proceed if Fox finds an alternative, independent home for Sky News.

“I agree with the CMA that divesting Sky News to Disney, as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified,” said Hancock.

“The CMA report sets out some draft terms for such a divestment, and Fox has written to me to offer undertakings on effectively the same terms. The proposals include significant commitments from Fox. But there are some important issues on the draft undertakings which still need to be addressed.

“I need to be confident that the final undertakings ensure that Sky News:

“As a result, I have asked my officials to begin immediate discussions with the parties to finalise the details with a view to agreeing an acceptable form of the remedy, so we can all be confident Sky News can be divested in a way that works for the long term.”

There is, of course, another major potential spanner in the works for Fox and that’s the arrival of US broadcast giant Comcast on the scene with a higher bid a month or so ago. Hancock hasn’t got any issues with Comcast so Fox will need to not only deal with Sky News but outbid Comcast if it’s going to achieve its UK ambitions. All of this is good news for Sky shareholders.

“Sky welcomes today’s announcements by the Secretary of State regarding the proposed offers for Sky by 21CF and Comcast,” said a Sky corporate announcement. “In respect of 21CF’s proposed acquisition of Sky, Sky notes that the Secretary of State considers that the undertakings provided by 21CF have provided a good starting point to overcome the adverse public interest effects of the proposed merger that he has identified, and that DCMS Officials have now been instructed to seek to agree final undertakings with 21CF.

“The Secretary of State has stated that, dependent on the outcome of these discussions, he would hope to be in a position to consult on any agreed final undertakings within the next two weeks. Sky also notes the Secretary of State’s final decision not to intervene on public interest grounds in relation to the Comcast offer for Sky.”

All of this is good news for Sky shareholders. It’s hard to imagine Fox throwing in the towel now, after all the hassle it has taken to get to this point, and it’s equally hard to imagine Comcast bailing out after just one counter-offer. Having said that today’s decision seems to have been priced in, with Sky’s share price not having moved much since Comcast first indicated its interest at the end of February.