After taking a couple of days to mull its options, 21st Century Fox has decided to sell its 39% stake in Sky to Comcast, enabling the Philadelphia-based media conglomerate to take full control of the European pay-TV giant.
The move, assented to by Disney (which will soon acquire most of Fox and would have inherited the Sky stake), ends the long quest to control Sky by Rupert Murdoch after three decades as a major investor. Comcast on Saturday won an auction with Fox, paying $40 billion for the 61% majority stake. The remainder is valued at around $15 billion, or £17.28 per Sky share.
“In light of the premium Comcast has agreed to pay for Sky, we and Disney have decided to sell 21st Century Foxs existing 39% holding in Sky to Comcast,” Fox said in a statement. “We congratulate Comcast on their pending acquisition.”
In a separate press release, Disney chairman and CEO Bob Iger highlighted the benefits of disposing of the Sky stake as well as the regional sports networks flagged by regulators, moves that will save tens of billions in costs. “Along with the net proceeds from the divestiture of the RSNs, the sale of Foxs Sky holdings will substantially reduce the cost of our overall acquisition and allow us to aggressively invest in building and creating high-quality content for our direct-to-consumer platforms to meet the growing demands of viewers,” Iger said.
Murdoch, 87, launched Sky in 1989, paring his stake down to 39% in 1994 through a 50-50 merger with rival BSB (which created BSkyB). Over many profitable years in the 1990s and 2000s, it became a critical asset, one that Iger referred to as the “crown jewel” of Fox as he assessed the companies $71 billion merger. Rupert Murdochs son, James, would serve as CEO of Sky, and later of 21st Century Fox. He plans to strike out on his own after the Disney deal closes, likely in early 2019.
The scandal early this decade over phone hacking by Rupert Murdochs News of the World tabloid ultimately undid the moguls years-long quest to gain full control of Sky. And yet, losing the auction to Comcast in some ways enabled him to claim yet another strategic victory. Wall Street has reacted with relief to Disney not being saddled with an expensive, traditional distribution asset, with Disney shares gaining nearly 4% since Monday. That helps Murdochs position as the soon-to-be-top shareholder in Disney, plus his tit-for-tat battle with Comcast since 2016 bid up the value of Sky shares, boosting the value of Foxs stake and enriching Murdoch by billions more.
Here is the full statement from Fox:
We are proud of the role our company has played in building Sky, and of the outstanding value we have delivered for shareholders of 21CF and Sky, and customers across Europe.
When we launched Sky in 1989 it was four channels produced from a prefab structure in an industrial park on the fringes of west London. We bet — and almost lost — the farm on launching a business that many didnt think was such a good idea. Today, Sky is Europes leading entertainment company and a world-class example of a customer-driven enterprise. This achievement would not have been possible without decades of entrepreneurial risk-taking and the commitment of thousands of colleagues, creators and dreamers. For nearly 30 years we have invested to create a dynamic and exciting business that has produced excellent returns for shareholders and has become one of the most admired companies in Europe.
We have provided greater choice and better value for families across Europe, and we have created more than 31,000 jobs across the continent. Today, Sky brings customers better TV than ever before and better entertainment experiences than many ever thought possible.
We are grateful to our exceptional colleagues at Sky for creating this unique and outstanding company and wish them continued success.