21st Century Fox gets go-ahead to buy the 61% of the business it does not already own

The government has finally given Rupert Murdoch clearance to take over Sky as the media mogul mulls a £26bn-plus bid to try to see off rival Comcast.

The new culture secretary, Jeremy Wright, has given Murdoch’s 21st Century Fox the green light to buy the 61% of Sky he does not already own after a final consultation on plans to make him sell Sky News to reduce his control of UK news media.

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Murdoch must also top up any potential shortfall in funding by Sky News’s new owner, which will be Disney if he can successfully take control of Sky, to keep its budget at £100m for the next 15 years.

Wright, who has only been in place a few days, said he was confirming the undertakings his predecessor Matt Hancock had decided needed to be put in place.

“I am content to confirm this position,” Wright said in a written ministerial statement. “It is right that Ofcom, the Competition Markets Authority and my department have taken such care in ensuring the bid is properly and effectively scrutinised. It is now a matter for the Sky shareholders to decide whether to accept [a Fox] bid.”

While Murdoch will be pleased to finally receive clearance after 19 months of regulatory scrutiny, he is locked in a bidding war with the US cable company Comcast that could still derail his ambition to take over Sky that stretches back to a first ill-fated attempt almost a decade ago.

The reaction of Sky’s share price on Thursday, up 3.4% to £15.45, showed investors expect at least one more round in the bidding war. The battle reached new heights on Wednesday when Fox bid £14 per share only to be trumped hours later by Comcast with an offer of £14.75 per share, valuing Sky at £25.9bn.

Sky’s independent committee recommended that shareholders accept Comcast’s offer – having earlier in the day told them to accept Murdoch’s bid. The speed of Comcast’s reaction was a deliberate move designed to show Murdoch that the company is determined to pursue Sky and has the stomach for a bidding war.

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“The speed with which Comcast has responded to Fox’s bid speaks volumes about the determination of Comcast, led by Brian Roberts, to win the day,” Ian Forrest, an investment research analyst at the Share Centre, said. “It is perhaps no surprise that the market seems confident that the battle has further to go as the share price is now at 1520p, well above the latest Comcast offer.”

Murdoch will have to decide whether he has the appetite for a bidding war – Sky’s share price is already up more than 50% since last summer – or give up on taking full control of the business he launched almost three decades ago.

Analysts at Jefferies expect a bidding war raising Sky’s target price from £16 a share to £17.50, valuing the business at almost £31bn.

The battle for Sky is playing out against a larger fight between Disney and Comcast to take over most of 21st Century Fox, which owns 39% of Sky as well as assets including the Hollywood studio behind films such as Deadpool and X-Men.



Last month, Disney upped its offer for Fox to $71.3bn ($38 a share). Earlier in the month, Comcast had trumped Disney’s first offer for Fox ($55.4bn; $28 a share) with a $65bn, or $35 a share, bid.

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Fox shareholders are due to vote on Disney’s offer on 27 July, unless Comcast ups its bid again as rumoured.

Under the terms of the proposed deal, Murdoch needs consent from Disney to increase his offer for Sky. Analysts believe that Disney, which has called Sky the “crown jewel” of the Fox assets, is up for the fight.

“While it is certainly possible that Fox (and in turn, Disney) is going to walk away from Sky and not match/exceed Comcast’s offer, it does feel hard to believe,” Richard Greenfield, of the US research firm BTIG, said. “It is just hard to imagine Disney not going for the knockout one-two punch and taking everything. We continue to believe that if Comcast really wants to own Sky, their best way to do it is by acquiring the Fox assets – winner takes all was always the scenario that appeared most likely to us.”