The realm of TV networks: Murdoch’s Fox acquires Sky network in $14.6 bn deal | world-news | Hindustan Times
Today in New Delhi, India
Oct 23, 2017-Monday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

The realm of TV networks: Murdoch’s Fox acquires Sky network in $14.6 bn deal

The deal valuing Sky at £18.5 billion comes five years after Australian-born media mogul Murdoch failed to clinch a takeover after a notorious phone-hacking scandal at his newspaper empire.

world Updated: Dec 16, 2016 07:45 IST
A photo shows a Sky sign on a building at the British Sky Broadcasting (BSkyB) headquarters in west London.
A photo shows a Sky sign on a building at the British Sky Broadcasting (BSkyB) headquarters in west London. (AFP File Photo)

Rupert Murdoch’s 21st Century Fox on Thursday sealed a $14.8 billion (14-billion-euro) cash deal for control of European pay-TV giant Sky, expanding the footprint of the media-entertainment powerhouse.

Fox said it had reached a formal agreement to buy the 61 percent stake in Sky that it does not already own.

The deal valuing Sky at £18.5 billion comes five years after Australian-born media mogul Murdoch failed to clinch a takeover after a notorious phone-hacking scandal at his newspaper empire.

“We’ve been clear that partial ownership of Sky was not a natural end state for us,” Lachlan Murdoch, who shares the title of executive chairman with his father Rupert, said in a conference call.

“Given our long history with the company and how much Sky has grown its production and distribution businesses, which fit into and complement our core competencies, fully combining the business is a clear, logical next step in our portfolio evolution.”

The company said the deal “creates a global leader in content creation and distribution, enhances our sports and entertainment scale, and gives us unique and leading direct-to-consumer capabilities and technologies.”

Media mogul Rupert Murdoch wanted to take over Sky network long back but had to stall his bid in 2011 as the controversy regarding his News of the World tabloid broke out. (Reuters)

It adds Sky to the New York-based group’s television portfolio, which includes the Fox broadcast and cable operations, National Geographic and the pan-Asian pay TV operator Star.

London-listed Sky last week revealed that it had agreed to an offer of £10.75 per share from 21st Century Fox.

21st Century Fox already owns a 39.1 percent stake in Sky, whose five main markets are Austria, Britain, Germany, Ireland and Italy.

‘Enhanced capabilities’

Fox’s statement said that bringing Sky into the fold would “create an improved balance between subscription, affiliate fee, advertising and content revenues. This combination creates an agile organisation that is equipped to better succeed in a global market.”

21st Century Fox is one of the world’s largest entertainment companies, with a vast portfolio of cable, broadcast, film, pay TV and satellite assets across six continents.

Its broadcasting and cable properties include FOX, Fox News Channel, Fox Business Network, National Geographic Channels, STAR India, 28 television stations in the United States and more than 300 international channels.

Sky broadcasts the 24-hour Sky News channel, blockbuster movies and live English Premier League football, and also provides internet and telephone services.

The bid price represents a premium of 40 percent from Sky’s closing share price level last Tuesday, the day before the initial proposal was made.

Obstacles ahead

Back in 2011, Murdoch was forced to abandon his previous takeover bid of Sky -- then known as BSkyB -- as controversy raged over the hacking of celebrities and crime victims by his tabloid the News of the World, which was subsequently shut down.

Murdoch’s son, James Murdoch, became Sky chairman in January. He had previously served as chief executive between 2003 and 2007.

James Murdoch told the conference call Thursday that the acquisition brings “a set of consumer capabilities ranging from data-driven digital advertising to a multiplatform leading consumer experience... Sky is much more than a satellite distribution company. It is a creative commercial and consumer powerhouse delivering its own content to customers across all platforms.”

In late 2014, Sky changed its name from BSkyB after completing the purchase of Sky Italia and a majority holding in Sky Deutschland, in a move which created a pan-European pay-TV giant.

Karen Bradley, culture minister in Britain’s conservative government, must now decide whether to refer Murdoch’s latest Sky takeover to media watchdog Ofcom.

The main opposition Labour party has raised objections to the deal and called upon regulators to examine it.

“Whether it will get past some of the more sceptical shareholders remains to be seen, and not forgetting the political legacy that surrounded the first attempt at a deal five years ago that caused that deal to fall through,” noted Michael Hewson, chief market analyst at CMC Markets UK.