From The New York Times:
LONDON — Comcast may have found a way to disrupt Walt Disney Company’s plan to buy most of 21st Century Fox: topping Fox’s bid to buy the British satellite broadcaster Sky with its own $31 billion takeover offer.
The bid, announced on Tuesday, seizes upon 21st Century Fox’s difficulties buying the piece of Sky that it does not already own. British regulators have expressed repeated concerns about giving Rupert Murdoch and his family more control over the country’s media, stretching the approval process out over more than a year and forcing 21st Century Fox to offer more concessions.
Comcast has said that buying Sky would help it expand in Europe, where the broadcaster has 23 million customers and owns rights to show the English Premier League and other professional soccer leagues. Disney, too, has been keen on expanding internationally, with the British company serving as an important part of its $52 billion plan to buy a significant portion of 21st Century Fox.
Whoever prevails, it will shake up Disney’s plans. Either 21st Century Fox will have to pay more for Sky, or Disney will lose a valuable international property to Comcast.
Disney, Comcast and others are rushing to strike major deals in a swiftly changing media landscape. Consumers increasingly stream their movies and televisions shows over the internet. Upstart technology companies like Apple and Amazon nurture ambitions to rival Hollywood’s big studios. Online broadcasters are even increasingly bidding for the rights to show sports — long a major moneymaking business for traditional broadcasters and cable operators.
The saga over Sky has been one of the most drawn out deal-making dramas in media.
Mr. Murdoch, the 21st Century Fox executive chairman, has tried for years to take full control of the broadcaster, which he started in 1989. By owning the rest of Sky, 21st Century Fox would be better positioned to take on the likes of Netflix, Amazon and other streaming giants.
In 2011, Mr. Murdoch was forced to withdraw a $12 billion offer for the rest of Sky as a firestorm erupted over phone hacking by the news media in Britain. The scandal eventually led to the closure of the News of the World, the first newspaper Mr. Murdoch acquired in Britain in the late 1960s.
In December 2016, 21st Century Fox tried again, in an effort to expand its global reach and cement Mr. Murdoch’s legacy. The company agreed to buythe 61 percent of Sky that it does not own for about $16 billion.
While the Office of Communications, or Ofcom, ruled in June that Mr. Murdoch and other company executives were “fit and proper” to hold broadcasting licenses in Britain, it also said that the deal warranted more scrutiny. In the regulator’s view, the sexual harassment scandal at Fox Newshad amounted to “significant corporate failures.”
Then last month, Britain’s competition regulator provisionally rejected the deal, saying that it was “not in the public interest” to have
The regulator said it was concerned the deal would give the Murdoch family “too much influence over public opinion and the political agenda.” It noted at the time that Murdoch-controlled outlets, which include the newspapers The Sun and The Times of London, were already consumed by nearly a third of Britain’s population.
In hopes of winning over regulators, 21st Century Fox has offered to establish a “fully independent” editorial board for Sky News and to continue to fund the Sky News brand following the transaction for at least 10 years.
21st Century Fox had hoped complete the Sky deal before the Disney sale was finalized. But Comcast’s move just adds uncertainty to an already complicated process.
Comcast has circled 21st Century Fox in the past. Last year, the cable giant was in preliminary talks to buy the entertainment assets owned by 21st Century Fox, including the minority stake in Sky. Disney ultimately prevailed.
At the very least, Comcast has likely made it more expensive for 21st Century Fox to buy all of Sky. Under the terms of its proposed bid, Comcast said it would pay £12.50, about $17.50, a share in cash. That would represent a premium of 13 percent over its closing price on Monday and is about 16 percent above 21st Century Fox’s current offer of £10.75.
On Tuesday, shares of the British broadcaster jumped by nearly one-fifth. The stock surge suggested investors expected 21st Century Fox to back away or come back with an even better offer.
For either Comcast or Disney, Sky offers a platform for international expansion.
Comcast said in a statement that about a quarter of its revenue would come from international operations should it seal a deal with Sky, up from 9 percent currently. In addition to its other businesses, Sky has also announced plans to start streaming services in Spain and Switzerland.
“We look at Sky as a media company: Sky News, Sky Sports, Sky Movies,” Brian L. Roberts, Comcast’s chairman and chief executive, said on a conference call with analysts. “There’s tremendous presence in the content creation, not just the distribution.”
In a research note on Tuesday, Polo Tang, a UBS analyst, said that Sky could be “strategically interesting” to a variety of bidders, given its content and its broadcast and streaming distribution network. It also recently retained the rights to the Premier League at a lower cost than analysts had expected.
Mr. Tang said that the benign outcome of the Premier League auction potentially “gives Fox scope to raise its offers.”
Comcast said that it is seeking control of more than half of Sky’s shares with Tuesday’s offer but that it is ultimately interested in acquiring all of the British broadcaster.
In a statement, Sky urged shareholders to take no action yet. The broadcaster added that its independent directors “are mindful of their fiduciary duties and their obligations under the U.K. Takeover Code.”
Disney and 21st Century Fox representatives did not immediately respond to requests for comment.