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21st Century Fox makes takeover bid for Sky
21st Century Fox, the international film and television giant behind hit shows like The Simpsons and Modern Family, has tabled a takeover bid for Sky, the owner of Sky News.

The cash offer values Sky shares at 1075p each - less the value of any dividends paid subsequently by Sky - putting a valuation on the company of £18.48bn. 

21st Century Fox, whose other media assets include 20th Century Fox, one of Hollywood's largest studios, currently owns 39.1% of Sky and it has long been speculated in the City that it would seek to buy full control.

Independent directors of Sky - which is Europe's biggest pay television broadcaster with 21 million subscribers in the UK, Ireland, Germany, Italy and Austria - have agreed to recommend the offer to shareholders other than 21st Century Fox. 

However, the company said that "certain material terms" remained under discussion and that there could be no certainty that an offer would be made by 21st Century Fox.

The announcement follows a rise in Sky's share price earlier today. 

Shares of Sky closed up 210.5p at 1000p - a 26.7% rise on the day. The offer price recommends a premium of 36% to Sky's closing share price on Thursday evening.

Sky said it had formed an independent committee of its board to consider the American giant's proposal. 

Members include Martin Gilbert, the company's senior independent director and Jeremy Darroch, the chief executive of Sky. 

Mr Gilbert is founder and chief executive of Aberdeen Asset Management, one of the UK's biggest fund management firms, and a respected City grandee. 

Others on the committee include Andrew Griffith, Sky's chief operating officer and chief financial officer, and Andrew Sukawaty, another non-executive director of Sky and previously chief executive of European satellite operator Inmarsat. 

James Murdoch, Sky's chairman, is not on the committee because he is chief executive of 21st Century Fox.

The deal is likely to ignite a huge amount of debate in the UK media industry.

News Corporation, Rupert Murdoch's media giant, tabled an £8bn takeover bid in June 2010 for the shares in Sky - then called British Sky Broadcasting - that it did not already own. 

That deal attracted a good deal of scrutiny because it would have brought together Sky News with News Corporation's UK media assets, including The Sun, Britain's biggest-selling daily newspaper, The Times, The Sunday Times and the News of the World. 

This attracted criticism from rivals of those newspapers about a concentration of media ownership and, in response to regulatory concerns, BSkyB agreed to hive off Sky News as a separate company. 

However, in July 2011, News Corporation abandoned its offer when it emerged that the News of the World had hacked the mobile phone of murder victim Amanda 'Milly' Dowler. 

News Corporation subsequently demerged its film and television assets outside Australia into a new company, 21st Century Fox, leaving it as a business focussed on newspaper titles from around the world - apart from the UK titles like The Sun and The Times it also owns the Wall Street Journal, the Australian and the New York Post - and the book publisher Harper Collins. 

There are likely to be fewer concerns from rivals of either Sky or the UK newspaper businesses owned by News Corporation about a concentration of the news market.

Sky traces its origins to Sky Television - which was launched by Rupert Murdoch in February 1989. 

The business merged with rival satellite broadcaster British Satellite Broadcasting in November 1990 and it floated on the London Stock Exchange in October 1994 in a move that saw News Corporation's stake reduced to 40%. 

However, it retained close ties with News Corporation and 21st Century Fox that, two years ago, saw Sky buy the American company's interests in Sky Italia and Sky Deutschland to become a pan-European broadcaster.

In an email to Sky's near-30,000 employees, Mr Darroch said the offer was "the first step in what will now be a formal process over the coming weeks".

He added: "As you know, 21st Century Fox were the founders of our business and have always been an extremely supportive shareholder and backer of Sky. Many of us have worked closely with them over the years and know them very well."

Because 21st Century Fox already owns some 39.1% of Sky, buying full control of the company would cost it an estimated £11.25bn. 

Speculation has mounted about a possible deal in recent months due to the fall in the pound against the US dollar - reducing the value of Sky, whose shares are quoted in sterling, in dollar terms.
Was only a matter of time before they came back with an offer

Surprised if this deal goes ahead given the troubles surrounding it before with the phone hacking scandal
So it looks like Murdoch will control the media in US and western Europe!
No doubt if they are willing to spend over £18 billion on Sky they will look to recoup the money by raising prices for all the services.

On the other hand it gives Sky even greater access to premium content
Sky plc, the owner of Sky News, has agreed to a takeover by 21st Century Fox.

The UK-based home entertainment and communications company made the announcement less than a week after Fox's renewed bid interest surfaced after a previous deal was withdrawn in 2011.

The terms of the formal offer, being recommended by an independent committee of directors at Sky, would mean Fox paying £11.7bn, or £10.75 per share, for the 61% of Sky it does not already own.

That represents a 40% premium on the closing price of Sky shares on 6 December. The deal remains subject to a shareholder vote and regulatory approval.

21st Century Fox said: "The strategic rationale for this combination is clear.

"It 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.

"It adds the strength of the Sky brand to our portfolio, including the Fox, National Geographic and Star brands."

Fox signalled that it intended to keep Sky News as part of the business, having agreed during its last attempt to take control of Sky five years ago to hive it off amid concerns about media plurality.

Martin Gilbert, Sky's deputy chairman, said: "We, supported by our advisers, believe 21st Century Fox's offer ... will
accelerate and de-risk the delivery of future value for all Sky shareholders.

"As a result, the Independent Committee unanimously agreed that we have a proposal that we can put to Sky shareholders and recommend."

Under the rules governing such takeovers, the Culture Secretary Karen Bradley now has 10 days - until Christmas - to decide whether to refer the deal to the media regulator, Ofcom.

The Government has pledged to be "scrupulously fair and impartial" in its handling of the Fox offer.

The Department for Culture, Media and Sport declined to comment on the development on Thursday.
Karen Bradley, the Secretary of State for Culture, Media and Sport, has said she is minded to refer the takeover bid by 21st Century Fox for Sky, the owner of Sky News, to the Competition and Markets Authority for an in-depth investigation.

She said this was because Ofcom, the broadcasting regulator, had told her the takeover would raise "material concerns" about media plurality in Britain.

Specifically, Ofcom had highlighted the ability the Murdoch Family Trust would have to "influence the overall news agenda" and "to influence the political process".

The Murdoch Family Trust is a shareholder in both Fox, the international film and television giant behind hit shows such as The Simpsons and Modern Family, and in News Corporation, owner of The Sun, Britain's biggest-selling newspaper.

Ms Bradley said: "These are clear grounds whereby a referral to a Phase 2 investigation is warranted - so that is what I am minded to do."

Fox and Sky, along with other interested parties, will now have 10 working days - until July 14 - to make further representations to the Secretary of State.

News Corp and Sky together currently own three of the UK's most significant media outlets, according to Ofcom's data - Sky News, the Sky News website and The Sun.

The BBC alone owns seven of the most important 20 news providers, including two of the top three.

Ms Bradley said: "The reasoning and evidence on which Ofcom's recommendation is based are persuasive.

"The proposed entity would have the third largest total reach of any news provider - lower only than the BBC and ITN - and would, uniquely, span news coverage on television, radio, in newspapers and online."

The decision means a takeover of Sky is now unlikely to be completed by the end of the year as Fox had originally told its shareholders.

However, Ms Bradley said Ofcom had ruled that there were no public interest grounds for referring the proposed takeover to the CMA with regard to Fox's commitment to adhere to UK broadcasting rules, or whether it would fail a so-called test over whether Fox was 'fit and proper', in the jargon, to hold a UK broadcasting licence.

Ms Bradley also revealed that Fox had given a number of commitments to address the public interest concerns flagged by Ofcom.

These included a promise to maintain the editorial independence of Sky News by establishing a separate editorial board, with a majority of independent members, to oversee the appointment of the head of Sky News and any changes to Sky News editorial guidelines.

She said Fox had also committed to maintain Sky-branded news for five years with spending "at least at similar levels to now".

She said Ofcom had judged these remedies would mitigate media plurality concerns but that they could be further strengthened.

On that basis, Ms Bradley said, she was still minded to refer the deal to the CMA.

Shares of Sky rose by nearly 4% on the news to 991p.

That remains a significant discount to the 1075p at which Sky shares would be valued under the takeover - indicating that investors think the likelihood of a takeover has increased but that there are still some regulatory risks to a deal going through.

21st Century Fox, the world's fourth largest media company after Comcast, Disney and Time Warner, already owns a 39.1% stake in Sky.

It tabled a proposal just before Christmas to buy the remainder of the company for £11.7bn, valuing the whole of Sky at £18.5bn.

Ofcom was asked to investigate, under the 2002 Enterprise Act, whether the takeover was in the public interest on the grounds of media plurality and broadcasting standards.

The plurality issue concerned whether the Murdoch family, major shareholders in both News Corp and Fox, would emerge from a takeover with too large a share of the UK news market.

The broadcasting standards issue strand of the investigation was an assessment of Fox's commitment to uphold UK broadcasting standards.

On the plurality issue, Fox is understood to have pointed out the changed circumstances of the UK media landscape since News Corp's bid for Sky and highlighted how, due to the rapid proliferation of the internet, there is more choice and diversity in the news market than before.

Newspaper circulation has declined by almost two-fifths since 2010, while the rise of web-based news providers such as Buzzfeed, along with the way the likes of Google, Facebook and Twitter have changed the way people consume news, mean that the combined share of News Corp and Fox of the UK news market has fallen.

The 'fit and proper' issue is thought to have occupied more of Ofcom's time.

The regulator received representations from critics of Fox, including Ed Miliband, the former Labour leader, and Sir Vince Cable, the former Business Secretary.

It also met in person Wendy Walsh, one of five women who claims to have suffered sexual harassment at the hands of Bill O'Reilly, a former star presenter on Fox News who was fired in April.

Ofcom said on this matter today: "We have concluded that the overall evidence available to date does not provide a reasonable basis for Ofcom to conclude that, if Sky were 100% owned and controlled by Fox, it would not be a fit and proper holder of broadcast licences.

"Our assessment finds that Sky would remain a fit and proper licence holder in the event of the merger."

Sky has 22 million customers across the UK, the Republic of Ireland, Germany, Italy and Austria.

The European Commission has already given an unconditional green light to the takeover.

It completed its own separate review into the deal at the beginning of April and concluded it would raise no competition concerns.

Earlier this week, the Republic of Ireland also cleared the takeover, ruling that it would not result in insufficient plurality for any audience in the country.

Fox's takeover bid for Sky is the latest in a series of big transactions in the sector during recent years amid a growing mood for consolidation in the face of mounting digital competition.

The biggest deal in the sector has seen AT&T, the US telecoms giant, agree to pay $85.4bn for Time Warner.

Other deals saw Comcast, the US cable giant, buy broadcaster NBC Universal in 2011 while Virgin Media, the UK cable operator, was bought for £15bn in 2013 by US cable tycoon John Malone's Liberty Global.

Sky first received a takeover approach from News Corporation, the predecessor company to Fox, in June 2010.

That bid was also referred to Ofcom, which agreed to allow the deal to go through, provided Sky News was spun off into a separate company.

However, the following July, the bid was dropped following public anger at revelations that the News of the World had hacked the mobile phone of murdered teenager Milly Dowler.

News Corporation subsequently demerged into two businesses.

One, continuing under the name News Corporation, owns newspaper titles including the Wall Street Journal, The Australian, the New York Post, The Sun, The Times and the Sunday Times, the book publisher Harper Collins and some broadcasting assets, including commercial radio broadcaster Talk Radio.

The other company, 21st Century Fox, owns film and television assets around the world.

Its only UK assets at present are its existing 39.1% shareholding in Sky.

The Murdoch Family Trust owns the shareholdings in both companies of Rupert Murdoch, who is the executive co-chairman of Fox and executive chairman of News Corp.
21st Century Fox (21CF) has offered to strengthen guarantees of Sky News' independence in an attempt to win regulators' backing for its takeover of Sky plc, the UK's biggest pay-television broadcaster.

The US-based media group has tabled a package of what it described as "firewall remedies" to the Competition and Markets Authority (CMA), including a pledge to establish an independent Sky News editorial board that would remain free of any influence by 21CF employees.

21CF would also guarantee the continued funding of Sky-branded news services for at least five years, and would have to disclose any effort to interfere with Sky News' editorial agenda by 21CF to the Secretary of State for Digital, Culture, Media and Sport.

Documents published by the CMA on Monday revealed the additional safeguards proposed by 21CF as it seeks to bring its 14-month pursuit of Sky to a swift conclusion.

Sky is 39%-owned by 21CF, controlled by the Murdoch Family Trust - which also controls News Corporation, the publisher of British newspapers including The Sun and The Times.

21CF agreed to buy the remaining 61% of Sky in December 2016, since when a string of regulatory obstacles have forced it to extend its timetable for completing the deal.

Last month, the CMA provisionally ruled that the takeover would raise media plurality concerns on the basis that Rupert Murdoch would exert excessive influence over the UK news media.

It raised the prospect of behavioural remedies including the ones disclosed on Monday, or a more far-reaching structural solution such as the spin-off or divestiture of Sky News.

The latest proposals include a so-called 'sunset clause' relating to the separate agreement between The Walt Disney Company to buy 21CF's entertainment assets - including its 39% Sky stake - for $52bn.

Because the larger transaction requires regulatory approval that will not be granted before the CMA must make a final ruling on the takeover of Sky, 21CF has said its independence undertakings relating to Sky News will evaporate if the Disney deal completes.

The Disney-21CF transaction will bring together the 20th Century Fox film studio behind hits such as Avatar, X-Men and Ice Age together with Disney's film assets, which include Pixar, Marvel and the Star Wars maker LucasFilm.

However, uncertainty relating to that deal has been heightened by reports that Comcast is considering renewing its own pursuit of the 21CF business.

The CMA will make its final decision about the Sky takeover, with a report submitted to Matthew Hancock, the Secretary of State, by May 1.

Looks like it will happen then

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