Comcast $US34b tops Fox's offer for Sky


Comcast knows it will likely need to divest Fox's regional sports networks if it wants to buy the company's assets

Shares in Sky SKYB.L jumped higher on Thursday after Comcast CMCSA.O submitted a $34 billion (25.74 billion pounds) bid for the group just hours after Rupert Murdoch raised his offer, escalating a trans-Atlantic bidding war for the European pan-TV group.

Fox could face further competition from the United States cable giant Comcast, however, after it forced Sky's independent directors to drop their previous backing for Fox with an unexpected £12.50-a-share bid for the group in February.

Now it's up to Comcast (cmcsa) to decide how much Sky is worth.

Fox is already Sky's biggest shareholder, with a 39.1% stake.

RBC Capital Markets analyst Steven Cahall issued a report today noting that, with the bid for Sky, Comcast may be choosing sides as the cable giant simply can't afford both acquisitions.

Comcast subsequently made a rival offer of $66bn in cash for those assets - prompting Disney to sweeten its terms last month to $85bn, including debt, in cash and shares.

The improved bid means Sky investors now have 60 days to weigh up the offers. Fox wants a deal at 14 pounds a share.

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According to The Hollywood Reporter, an executive for 20th Century Fox has filed a lawsuit to put a stop to the sale of 21st Century Fox's studio assets to Disney, which he claims violates securities rules.

The end of the week is also be the deadline for Comcast to post an offer to Sky shareholders, who then have 60 days to consider that offer under United Kingdom takeover rules.

"Disney's internal forecasts now, on the basis of the cash flows they've published for Sky, would value it at 16 pounds", he said.

One hedge fund manager with a stake in Sky welcomed that pledge as a sign that Disney backed Fox in the battle. News Corp., which is controlled by the Murdochs, withdrew its bid for Sky soon after. Comcast is said to be ready to negotiate with the feds on the number of Fox RSN's it would have to divest as some of them may overlap with Comcast's NBC Sports regional networks.

Fox's long-running pursuit for all of Sky has been plagued by United Kingdom government fears over media plurality and broadcasting standards and the influence of Australian-born USA citizen Murdoch.

"There are enough sub-plots in the race to acquire Sky to commission a primetime drama", Salmon said.

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