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U.S. TV Firm Comcast Makes £22B Offer For Sky

Comcast formalized its £12.50 ($17.41)-a-share bid for Sky, "setting the stage for a battle with Rupert Murdoch’s 21st Century Fox and Walt Disney," according to Matthew Moore of the LONDON TIMES. The bid "represents a premium" of about 16% on Fox’s existing offer of £10.75 ($14.98) a share and values the pay-TV broadcaster at £22B ($30.7B). Sky shares rose 4% to £13.61 ($18.96) on "expectations of a counter offer." Comcast announced its intention to launch a bid for Sky in February, "gatecrashing" 21st Century Fox’s planned £18.5B ($25.8B) takeover. Comcast has also pledged "not to purchase any newspapers" in the U.K. for five years to "assuage any concerns about media plurality" (LONDON TIMES, 4/25). In London, Mark Sweney reported Comcast, which has 1,300 employees in the U.K. in subsidiaries including the production company behind Downton Abbey, "made a number of pledges" such as keeping Sky’s HQ in Osterley, southwest London, and guaranteeing the "editorial independence and funding of Sky News for at least 10 years." Comcast Chair & CEO Brian Roberts said, "We are determined to be responsible and trusted owners of Sky. We understand and appreciate the value of news and are committed to protecting the important role that Sky News plays in providing a high-quality impartial news service" (GUARDIAN, 4/25).

BIDDING WAR: In London, Christopher Williams reported Comcast's move came days before the U.K. Competition & Markets Authority was "due to provide final advice" to U.K. Culture Secretary Matt Hancock on "whether to allow the Fox takeover in light of such potential safeguards against outsized Murdoch sway" over the U.K. media. Roberts is planning cost savings and a "cross-selling boost" of around $500M following the merger, which Comcast said it aims to complete "by the end of this year." The impact on jobs will be "limited," Roberts said, "with savings mostly drawn from sharing technology and production" on int'l sporting events. The "rising prospect of a bidding war" will increase the investor focus on Sky's independent directors, led by Deputy Chair Marinn Gilbert and including CEO Jeremy Darroch and COO Andrew Griffith (TELEGRAPH, 4/25).

OFF THE HOOK: In L.A., Stewart Clarke reported the committee formed to evaluate 21st Century Fox’s bid for Sky withdrew its recommendation of that offer after Comcast "tabled a richer offer on Wednesday." In withdrawing its recommendation and killing the cooperation agreement, the committee added that Fox "would no longer be on the hook for provisions including a weighty break fee" that could have totaled £200M ($279M). The committee is separate from the Sky board but includes Darroch and other senior execs. The Sky committee "noted its duty is to maximize value for shareholders." With "that commitment in mind, and a better offer on the table," insiders said that it "had to remove its recommendation of the Fox offer" and characterized that action as "housekeeping" (VARIETY, 4/25). The BBC's Simon Jack wrote the markets think there will be a response from Murdoch, as shares are trading £1 ($1.39) "higher than the Comcast bid." The fight "is already getting dirty, with teams of lawyers and PRs on both sides preparing briefing notes" about each others' previous misdemeanors, scandals and broken promises. The "bottom lines are these." A U.S. company -- either Comcast or Disney -- "will end up owning Sky" (BBC, 4/25). 

FOX RESPONDS: In L.A., Georg Szalai reported Fox said in a statement that it "notes the announcement made by Comcast Corporation of a firm intention to make an offer for the entire issued and to be issued share capital of Sky plc," adding that it "remains committed to its recommended cash offer for Sky announced on 15th December 2016 and is currently considering its options." Fox concluded, "A further announcement will be made in due course" (THE HOLLYWOOD REPORTER, 4/25). REUTERS' Sandle & Dang reported Morningstar analyst Allan Nichols said that Comcast’s offer "fully valued Sky, and any increase would be negative for Comcast, Disney or Fox shareholders." That would "likely keep a lid on a bidding war," he wrote in a research note. Hedge fund Elliott Management "has taken a stake" of almost 3% in Sky, according to its latest filing, and other shareholders "have also argued that Disney’s agreement to buy Fox implies a higher value for Sky" (REUTERS, 4/25).

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