Rupert Murdoch’s control of Sky is likely to end after three decades after his 21st Century Fox company was outbid by US rival Comcast, which offered £30bn to take full control of the British-based broadcaster in a high-stakes auction.
The announcement on Saturday that Comcast has emerged on top was made after both companies submitted blind bids in a highly unusual process overseen by the Takeover Panel following a two-year bidding process. Comcast bid at £17.28 per share, substantially more than Fox’s £15.67 offer.
The bid has already been greenlit by Sky’s independent directors and shareholders now have until 11 October to decide whether to accept the recommended offer.
Murdoch has craved full control of Sky for years and his Fox company already owns 39% of the company. But Murdoch has agreed to sell most of his TV and film assets to Disney in a separate takeover deal, meaning even if he had been victorious he would not have been in total control for long.
The auction of Sky involved a certain amount of game theory on both sides. Fox’s decision to take part in the secretive process may have forced Comcast to table a knockout bid to ensure victory – meaning Fox will in turn receive an increased sum for the 39% stake it already owns. There is also an element of revenge after Comcast was beaten by Disney earlier this year in the battle for Fox’s US entertainment business.
The takeover process began in December 2016 when Fox tabled a bid to take full control of the London-based satellite broadcaster in a deal valuing the business at £18bn. The proposal then cleared a number of regulatory hurdles in the face of legal challenges and strong parliamentary opposition from Labour politicians including Ed Miliband and the current deputy leader, Tom Watson.
In February, Comcast unexpectedly gatecrashed the deal, forcing Murdoch to engage in a costly bidding war that peaked with Comcast’s £26bn bid. Because neither bidder declared their offer to be final, all parties agreed to take part in an auction process to decide the ultimate winner – the first time that such a process has been used in a decade and a rarity for such a large company.
Jeremy Darroch, Sky’s group chief executive, said: “As part of a broader Comcast we believe we will be able to continue to grow and strengthen our position as Europe’s leading direct to consumer media company.
“Today’s outcome is down to the hard work of tens of thousands of people who have built and developed this business together over the last 30 years. Sky has never stood still, and with Comcast our momentum will only increase.”
The auction marks a dramatic end for Sky as an independent company. The broadcaster began life in 1989 when Murdoch launched a standalone business offering four channels from an industrial estate in west London. The company was making enormous losses and soon merged with rival British Satellite Broadcasting to form BSkyB. Under Murdoch’s leadership the combined business hit on a winning formula of selling subscriptions on the basis of film and football rights, helping to transform the British media industry and become a highly profitable business.
Sky currently serves 26 million customers across Europe and its direct relationship with them is prized in an age when traditional media businesses are concerned about the threat posed by new streaming businesses.
Sky has already struck a deal with Netflix to put the service on its set-top boxes and is also celebrating after cutting the amount it pays for Premier League rights.