Green Light Given -- But Will Murdoch Be Able To Serve Up Sky To Disney?

Ladies and gentlemen, kindly take your seats. We're about to have a major UK media bidding war and it's going to be a blockbuster -- literally, given that it involves Fox, Disney, NBCUniversal (part of Comcast) and our very own Sky.

The news broke yesterday afternoon that the Culture Secretary Matt Hancock has revealed that he will not block Fox's bid for Sky as long as Sky News is funded for ten years and sold off. Given that the Murdochs have already proposed this as a remedy to media plurality concerns, you really can't get any more of a green light from the Government.

The Murdoch remedy has always been to sell off Sky News immediately to Disney ahead of the entertainment giant subsequently buying 21st Century Fox that would, they hope, include the whole of Sky -- including the 61% Fox does not currently own, but hopes to own soon now that the Government has given the go ahead.

Matt Hancock said yesterday that this remedy of selling Sky News to Disney is an acceptable way around media plurality concerns. The pain point, for the Government, would have been the potential for the Murdochs to own Fox News, Sky News and News Corp (the newspaper group which owns The Times, The Sun and The Sunday Times).

Perhaps the most interesting part is that Comcast has also been given the green light to carry on bidding. It never had the media plurality issues that affected the Fox and Murdoch bid for Sky. 

As Press Gazette reveals this morning, through its own editorial and in quoting Shadow Culture Secretary Tom Watson, this is pretty amazing news for Sky shareholders. On the one hand, they have an GBP11.7bn offer from Fox, and on the other they have a GBP22bn from Comcast. Sky was recommending the Fox bid right up to the point when Comcast nearly doubled it, and apparently for cash too.

As far as shareholder decisions go, this is a pretty nice one. And don't expect this to be the final word. It would take a brave person to bet against Fox and the Murdochs increasing their offer. There is the very obvious potential to put in a bid and raise it by whatever Disney is willing to pay for Sky News because the Comcast deal would keep Sky News part of Sky, and so there is no potential there to give extra money back to shareholders from a disposal.

I have been chatting with people in the industry over the past year or so about what Rupert Murdoch is up to. The move to buy the remaining 61% of Sky that he or Fox doesn't already own was questioned by many. To those inside media, however, it was a clear attempt to fatten up his empire to make it less susceptible to predatory offers, and at the same time make it a more appealing purchase if a big deal comes along that is to his liking.

So lo and behold, soon after he redoubles efforts to buy Sky in its entirety, the Disney deal to take over Fox but leave Murdoch with Fox News and a few other channels and not impact News Corp came along. Obviously, no deal is done until it is done, but it would appear that Disney gets the movies and entertainment side of the Fox family and Murdoch keeps news and some of its tv assets without any impact on the newspaper side of the business. 

Buying the rest of Sky gives Murdoch the options that go with being a far larger meal to swallow. The only question now, however, is whether he can serve up Sky as the cherry on top of the Disney deal, or whether Sky is the dessert he can't quite provide because it has been swiped from the table just as he was reaching for a spoon and the custard jar.

21st Century Fox and Disney definitely appear to be set to go to the movies together -- but whether they or NBCUniversal walk down the aisle with Sky will be the most fascinating media merger in UK history. Expect bids and counter bids and some very, very happy Sky shareholders. 

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