Sky shares fall as doubts raised over £11.7bn Fox bid

A report that Rupert Murdoch held talks about selling film and television assets to Walt Disney added another layer of uncertainty to his £11.7bn (€13.3bn) bid to buy all of broadcaster Sky.

Disney recently discussed buying 21st Century Fox’s movie and TV production studio studios, cable networks FX and National Geographic and international assets such as the Star network in India and its stake in Sky, CNBC said.

The talks were not currently ongoing, the broadcaster said.

Fox has bid £10.75 a share to acquire the remaining 61% of Sky it does not own, but the deal is tied up in regulatory purgatory until the middle of next year.

Shares in Sky closed 1% lower on the Ftse 100 index last night, ending the day at 930p, down 9.50, having earlier trading 1.3% lower.

Analysts at Liberum said they still saw a successful conclusion of Fox’s bid for Sky as the most likely outcome, but the Disney-Fox talks had thrown a curveball into the deal.

They said Fox may scrap its bid for Sky as part of a proposed sale of assets, and they also noted that Fox’s willingness to consider including the Sky stake in any sale could be seen as a signal that it feels less confident of gaining regulatory approval from the British government.

UBS, however, said a combination of Disney and Fox content could strengthen the rationale for buying all of Sky.

The rise of online competitors Netflix, YouTube and Facebook has slowed the growth of the pay-TV business, and forced the companies that rely on it to explore new ways of getting bigger.

“There are legitimate synergies in combining these companies, in Disney becoming bigger,” said Brian Wieser, an analyst at Pivotal Research.

“The bigger question is what is Fox thinking? This is so far removed from anything they’ve ever indicated before,” he said.

Sky was already starting to build a pan-European streaming platform with its Now TV and Sky Ticket products, and the addition of content from Disney as well as Fox would only make that more compelling, it said.

The bank also said in the event that a Fox-Sky deal was blocked, based on the CNBC article, Disney could be a potential strategic bidder for Sky and it noted it would not have the cross-media complications of a Fox bid.

Meanwhile, veteran hedge fund manager Crispin Odey said he now opposes 21st Century Fox’s bid for Sky, in a move that could raise further doubts about the deal.

Mr Odey, whose firm is Sky’s 17th biggest investor with a 0.9% stake, believes that Fox’s bid “starts to look like it’s not a very good price” for the broadcaster.

“I’d vote against the deal,” Mr Odey told Reuters, when asked how he would vote on the offer.

“The interesting thing is: can Sky survive happily without Fox? I think it can quite happily,” Mr Odey said.

Disney and Fox have contemplated major acquisitions in recent years. Disney looked to acquire Twitter and Fox tried to acquire Time Warner, owner of HBO and Warner Bros.


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