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| Rupert Murdoch confirms £11.7bn Sky bid | Rupert Murdoch confirms £11.7bn Sky bid |
| (35 minutes later) | |
| Rupert Murdoch’s 21st Century Fox has formally lodged its £11.7bn bid to take full control of Sky, as he looks to seal a deal to create a global media group spanning premium sports, films and entertainment. | |
| Murdoch will now need to gain regulatory approval for the deal, which values Sky at more than £18bn, which will give him control of pay-TV operations in the UK, Germany and Italy; in addition to ownership of the Times, Sunday Times and Sun, and radio group TalkSport. | Murdoch will now need to gain regulatory approval for the deal, which values Sky at more than £18bn, which will give him control of pay-TV operations in the UK, Germany and Italy; in addition to ownership of the Times, Sunday Times and Sun, and radio group TalkSport. |
| Fox has not raised the initial £10.75 per share offer it tabled on Friday. | Fox has not raised the initial £10.75 per share offer it tabled on Friday. |
| Karen Bradley, the culture secretary, now has 10 working days to decide whether the deal raises public interest concerns, specifically relating to media plurality. | Karen Bradley, the culture secretary, now has 10 working days to decide whether the deal raises public interest concerns, specifically relating to media plurality. |
| Bradley is likely to ask regulator Ofcom to launch an investigation, to see whether Murdoch will have too much control over news media in the UK. | Bradley is likely to ask regulator Ofcom to launch an investigation, to see whether Murdoch will have too much control over news media in the UK. |
| Murdoch controls Sky and assets including Fox News and film studios through 21st Century Fox, and newspaper and publishing assets such as the Times and Sun through a separate company, News Corp. | Murdoch controls Sky and assets including Fox News and film studios through 21st Century Fox, and newspaper and publishing assets such as the Times and Sun through a separate company, News Corp. |
| Ofcom will have up to 40 working days to file its public interest report on the deal, assuming Bradley asks the media regulator to investigate. | Ofcom will have up to 40 working days to file its public interest report on the deal, assuming Bradley asks the media regulator to investigate. |
| “We are excited to bring Sky fully into 21st Century Fox,” said 21st Century Fox executive chairman Lachlan Murdoch. “Partial ownership of Sky was not natural end state for us. Fully combining the businesses is a clear logical next step of portfolio evolution. It adds the strength of the Sky brand to our portfolio including Fox, National Geographic and Star brands. Considering the complete set of options in respect of capital allocation this transaction provides the most attractive returns of for 21st Century Fox shareholders.” | |
| Fox has said that if the deal is not done by the end of next year it will pay shareholders a sweetener of a 10p special dividend, which will equate to about £172m. However, Fox has said shareholders will not receive any dividend payments next year. | Fox has said that if the deal is not done by the end of next year it will pay shareholders a sweetener of a 10p special dividend, which will equate to about £172m. However, Fox has said shareholders will not receive any dividend payments next year. |
| Previously, Sky’s 10.75p per share offer was due to be reduced by taking off shareholder dividend payments next year. | Previously, Sky’s 10.75p per share offer was due to be reduced by taking off shareholder dividend payments next year. |
| Fox has said that if the deal falls through it will pay a £200m break free. In 2011, News Corporation paid a break free of about £38.5m after pulling out of its bid as the phone-hacking scandal engulfed Murdoch’s UK newspapers. | Fox has said that if the deal falls through it will pay a £200m break free. In 2011, News Corporation paid a break free of about £38.5m after pulling out of its bid as the phone-hacking scandal engulfed Murdoch’s UK newspapers. |
| Tom Watson, the shadow culture secretary, said that the government needed to refer the deal to regulators. | |
| “This bid was abandoned in the wake of the phone-hacking scandal, and now it’s back,” he said. “The secretary of state must refer the bid to Ofcom, to assess whether it would result in too much media power being concentrated in too few hands, and whether Rupert and James Murdoch are ‘fit and proper persons’ to run a broadcaster. “The government cannot be allowed to ditch the vital second part of the Leveson Inquiry, which would look at questions around unlawful or improper conduct within the Murdoch empire, at exactly the moment when Rupert Murdoch is attempting once again to strengthen his hold over the UK media.” | |
| A number of shareholders including Standard Life, Jupiter and Royal London Asset Management have said Fox is getting the pay-TV company on the cheap, arguing that Sky’s shares were at the offer level as recently as February. | A number of shareholders including Standard Life, Jupiter and Royal London Asset Management have said Fox is getting the pay-TV company on the cheap, arguing that Sky’s shares were at the offer level as recently as February. |
| Sky deputy chairman Martin Gilbert, who led an independent committee that evaluated the value of Fox’s offer for non-Murdoch shareholders, said that there was unanimous agreement for the deal. | Sky deputy chairman Martin Gilbert, who led an independent committee that evaluated the value of Fox’s offer for non-Murdoch shareholders, said that there was unanimous agreement for the deal. |
| If the deal does stretch into 2018, which Fox has said it does not expect, it will guarantee dividends to all shareholders but with a cap of 21.8p per share for the year ending June 2018. | If the deal does stretch into 2018, which Fox has said it does not expect, it will guarantee dividends to all shareholders but with a cap of 21.8p per share for the year ending June 2018. |
| James Murdoch, the chief executive of Fox and chairman of Sky, said that he believes this time the deal “passes regulatory muster” in both Europe and the UK. | James Murdoch, the chief executive of Fox and chairman of Sky, said that he believes this time the deal “passes regulatory muster” in both Europe and the UK. |
| “There are various bits and pieces to the European [regulatory] timeline and if necessary the UK timeline with the Department for Culture, Media and Sport and Ofcom having to make a number of decisions in the next little while,” he said. | “There are various bits and pieces to the European [regulatory] timeline and if necessary the UK timeline with the Department for Culture, Media and Sport and Ofcom having to make a number of decisions in the next little while,” he said. |
| In 2011, Rupert Murdoch was forced to agree to spin off Sky News into a separate company in order to quell media plurality issues because of his ownership of the Times, Sunday Times and Sun newspapers. | In 2011, Rupert Murdoch was forced to agree to spin off Sky News into a separate company in order to quell media plurality issues because of his ownership of the Times, Sunday Times and Sun newspapers. |
| “We will be engaging with the relevant authorities right away,” James Murdoch said. “We do think this passes regulatory muster. When the relevant authorities look at competition and potential UK intervention issues that no meaningful concessions will need to be made.” | “We will be engaging with the relevant authorities right away,” James Murdoch said. “We do think this passes regulatory muster. When the relevant authorities look at competition and potential UK intervention issues that no meaningful concessions will need to be made.” |
| The company also moved to try and allay fears that Sky News might be “Foxified” into a version of the rightwing Fox News. | The company also moved to try and allay fears that Sky News might be “Foxified” into a version of the rightwing Fox News. |
| “21st Century Fox will continue to broadcast news under the Sky brand, maintaining its excellent record of compliance with the Ofcom broadcasting code,” the company said. | “21st Century Fox will continue to broadcast news under the Sky brand, maintaining its excellent record of compliance with the Ofcom broadcasting code,” the company said. |
| Fox News has a much patchier record making a number of editorial transgressions in recent years: Ofcom last year criticised a programme on the channel for breaching the UK code when a guest said Birmingham was a city “where non-Muslims just simply don’t go”. | |
| The company said it intended to keep the UK as the “creative hub” of Sky programming and continue to commit “at least” the £700m budget on TV and film production it spent last year. | The company said it intended to keep the UK as the “creative hub” of Sky programming and continue to commit “at least” the £700m budget on TV and film production it spent last year. |
| Fox and Sky are aiming to push through a form of takeover that will make it easier to squeeze out shareholders opposed to the deal. | Fox and Sky are aiming to push through a form of takeover that will make it easier to squeeze out shareholders opposed to the deal. |
| The so-called “scheme of arrangement”, a court-backed process, requires approval from 75% of non-Fox shareholders but if this level is reached then all investors are forced to sell their stakes. | The so-called “scheme of arrangement”, a court-backed process, requires approval from 75% of non-Fox shareholders but if this level is reached then all investors are forced to sell their stakes. |
| It is understood that a significant number of shareholders will reject the implementation of the scheme when Sky holds a vote at a yet-to-be-scheduled extraordinary general meeting. | |
| Fox, which contols 37.19% of voteable shares, is not allowed to vote. This means that independent investors accounting for almost 16% of total Sky shares will need to vote against the scheme to block it being implemented. |