Fox increases funding guarantee for Sky News in bid to seal takeover

Cornelia Mascio
Giugno 20, 2018

The long-running saga of 21st Century Fox's $15B attempt to takeover European pay-TV operator Sky continues after British Culture Secretary Matt Hancock warned Disney would have to increase Sky News' budget to £100M ($132M) to get a deal over the line.

This comes after Hancock said earlier this month that 21st Century Fox would be allowed to take over European pay-TV firm Sky as long as it divests Sky News to Disney or another company.

The budget condition represents a more than 10% increase on the estimated £90m annual budget Sky News now has.

As it stands about 700 staff, including executives, senior managers and Sky News presenters, could share in the £350m payout at an average of £500,000 per person, dependent on performance targets being met.

If the Fox purchase price rises due to the Disney-Comcast bidding war, then "Disney's value would be negatively impacted as it would reduce the incremental value the company should be able to generate from synergies associated with the acquisition", wrote Pivotal's Brian Wieser, in a note acquired by Fast Company.

Britain said Rupert Murdoch's Twenty-First Century Fox had answered its remaining doubts about the independence of Sky News if the USA company buys all of its parent Sky, paving the way for a takeover battle over the pay-TV group.

Fox, which now owns 39pc of Sky, would continue to pay the costs of the rolling news channel for 15 years, even if it also sells the rest of the company to Disney as part of a massive asset sale.

The Fox board - which includes 87-year-old media mogul Rupert Murdoch and his sons Lachlan and James - has already agreed to sell the Fox portfolio to the Walt Disney Co. for $52.4 billion in Disney stock.

And he said any buyer would have to guarantee that Sky News remained financially viable, continued to operate as a major UK-based news provider and was able to make editorial decisions independently and free from any potential outside influence.

The broadcasting regulator Ofcom has previously said the closure of Sky News could "present risks to plurality equal to or greater than those presented by the [Fox] transaction itself".

In the wake of Comcast (CMCSA) making a higher, all-cash bid for 21st Century Fox (FOXA), Disney (DIS) is expected to add cash to its offer for the entertainment conglomerate, according to CNBC.

It'll all come down to what happens after Fox holds a board meeting on Wednesday to discuss Comcast's latest bid.

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