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Fox Agrees To Pay $14.6B For Sky Takeover

Fox and Sky have agreed to terms "on a full Murdoch takeover," with the U.S. firm "declining to improve" on its £10.75 ($13.38) per share approach "despite protests from other shareholders," according to Christopher Williams of the London TELEGRAPH. The "controversial deal" will combine 21st Century Fox's TV and film empire with Sky's pan-European distribution prowess and values the FTSE 100 company at £19B ($24B). Fox will pay £11.7B ($14.6B) for the 61% of Sky it does not yet own. A 21st Century Fox spokesperson said, "It creates a global leader in content creation and distribution, enhances our sports and entertainment scale, and gives us unique and leading direct-to-consumer capabilities and technologies." The combination will "face scrutiny by European competition watchdogs and could also be referred to British authorities to examine its impact on media plurality." When the Murdoch family "last bid for full control of Sky they were forced to offer safeguards over the editorial independence of Sky News." This time "they have made promises on jobs and investment, although they are not legally binding." On a call with analysts, Fox CEO & Sky Chair James Murdoch predicted that "no meaningful concessions will need to be made" to regulators. He said that buying Sky "was the best use of Fox's money given 'a very wide' set of options" (TELEGRAPH, 12/15). In London, Mark Sweney reported a committee of Sky’s independent directors, led by Martin Gilbert -- the broadcaster’s deputy chair and the CEO of Sky shareholder Aberdeen Asset Management -- scrutinized the deal "on behalf of non-Murdoch investors." The committee, which unanimously accepted the deal, included Sky CEO Jeremy Darroch and Sky CFO Andrew Griffith, who are in line for a £40M ($50M) "payday if the deal goes through." Royal London Asset Management -- which controls £62M ($77M) of Sky shares -- Senior Fund Manager Richard Marwood said, “We would urge the independent committee of Sky directors, who recommended that shareholders accept the offer, to share more information on the independent financial advice that they based their agreement on.” Ofcom will have up to 40 working days "to file its public interest report on the deal," assuming U.K. Culture Secretary Karen Bradley asks the media regulator to investigate. Fox has said that "if the deal falls through" it will pay a £200M ($249M) break fee (GUARDIAN, 12/15).

FIVE YEARS LATER: REUTERS' Holton & Sandle reported the deal comes five years after Rupert Murdoch "failed in a previous attempt to buy Sky when a newspaper phone hacking scandal at his News of the World tabloid derailed the offer and damaged his reputation in Britain." Murdoch holds a "unique position in Britain," where former PMs such as Tony Blair and David Cameron once "lined up to secure the media mogul's blessing and the backing of his newspapers." Critics said that this has "given him too much say over British public and political life" (REUTERS, 12/15). In London, Bond, Massoudi & Garrahan reported Gilbert, who led the committee of independent directors which recommended the offer, "defended the way the process has been handled." Gilbert: "The independent committee, which was formed with the express purpose of protecting independent shareholders' interests in relation to the proposal from 21st Century Fox, has given full consideration to the fundamental value and prospects for the Sky group." With Sky "facing challenges on a number of fronts including sharp inflation" in the cost of live sports rights and increased competition from BT and streaming services such as Netflix and Amazon, Fox said the combined company would help create a "consumer powerhouse reaching 100 million households" (FINANCIAL TIMES, 12/15). The BBC reported Tom Watson, shadow culture secretary, urged Bradley to refer the deal to Ofcom, and said, "When she stood on the steps of Downing Street this summer, the prime minister said to the people of this country that 'When we take the big calls, we'll think not of the powerful, but you.' This is a big call. The government needs to decide whose side it's on" (BBC, 12/15).

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