The long-running battle for control of Sky is to be settled by a 24-hour auction starting this afternoon, the UK’s Takeover Panel has announced.
The broadcaster has been subject to rival bids from Rupert Murdoch’s Fox and US media giant Comcast, but now the city’s merger regulator has taken a highly unusual step to bring the saga to a speedy conclusion.
“Auctions of this sort are very rare” says The Guardian. There will be a maximum of three rounds of bids, and all must be cash-only offers. The lowest bidder – currently Fox – will go first, followed by the rival bidder.
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Sky stock has doubled in value over the past two years valuing the company at around £27bn, meaning the auction is likely to be the largest ever held in the UK.
With its nearly 23 million pay-TV subscribers in Europe, with more scope for expansion than in the US, and its broadband business, Sky is “a jewel in a crown”, says media analyst Alice Enders on the BBC.
In February, Sky Sports won the rights to UK Premier League TV packages, and Sky also licenses shows including Game of Thrones, as well as producing its own original content.
Fox had long been the frontrunner to take over the 61% of Sky it does not already own until a late bid by Comcast topped its £24.5bn offer.
Rupert Murdoch has long coveted the broadcaster, withdrawing a takeover bid in 2011 in the wake of the phone hacking scandal only to renew his interest in late 2016.
The process has, however, been beset by regulatory issues amid concerns over media plurality and the extent of the media mogul’s influence over the UK media landscape. It has also been complicated by Disney's deal to buy most of Fox's assets, which is due to be completed next year if approved by international regulators.
The Daily Telegraph says that means that “while Fox will be on the front lines of the auction, its bidding strategy will effectively be controlled by Disney.”
However, “Disney and Fox go into the process at a potential advantage, as Fox already owns 39% of Sky” says the paper: “If the final offers are similar in price, that could prove decisive, as Sky’s independent directors will be obliged to consider the likelihood of each buyer passing the 50% shareholder approval threshold required to complete a deal.”
Both Disney and Comcast want control of Sky partly as a defence against incursions by the tech giants into entertainment.
But no matter who wins the bidding war, Sky subscribers are likely to face higher prices, Enders says.
