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Will The Sky Deal Set In Sun Valley?

The annual meeting of media and tech moguls and mogulettes is being held in Sun Valley, Idaho this week and what’s the betting that the takeover battles for Sky Plc and media assets of 21st Century Fox get sorted out in meetings in the next day or so (the conference ends at the weekend).

The Murdochs, led by dad Rupert, are there, as is Disney’s Bob Iger and Comcast’s Brian Roberts, attended by courtiers and money men eager to make the multi billion dollar deals work and generate fees (for example) Goldman Sachs could make as much as $US100 million from advising 21st Century Fox and the Murdochs.

In London Sky shares leapt to an 18-year high on Thursday as investors reckoned there will be more bids in this now very expensive $US34 billion battle for control of the Pay TV giant, 39% owned by Fox.

The shares hit a high of 15.48 pounds and ended at 15.45 pounds, valuing the company at around $US36 billion and above the value of the Comcast offer of $US34 billion or 14.75 pounds a share.

Sky’s shares are now more than double the level they were when Fox/Murdoch launched its first offer at 10.75 pounds a share in December 2016.

The Comcast offer came only hours after Fox (with the support of Disney) lifted its offer to $US32.5 billion, topping Comcast’s first offer of $US31 billion. Independent Sky directors are now supporting the Comcast offer. The UK government overnight Thursday cleared the Fox offer.

The battle for Sky is a smaller part of the larger fight between Disney and Comcast to take over most of 21st Century Fox, which owns 39% of Sky as well as cable and satellite assets in India and the US, TV and film studios (but not Fox TV or Fox News Fox Sports and Fox Business News).

Disney upped its offer for Fox in June to $US71.3 billion ($US38 a share). Earlier in the month, Comcast had topped Disney’s first offer for Fox ($US55.4 billion; $US28 a share) with a $US65 billion, or $US35 a share, bid.

But with all the relevant players and their advisors in Sun Valley, whats the betting a deal is reached to avoid the next round in the bidding war for Sky and for the fox assets because this is the round where egos get in the way and value is destroyed by the billions of dollars.

So Comcast can have Sky Plc because that meets its aim of expanding into Europe and Disney gets the Fox assets, which meets its aim of bulking up to meet the challenge from Amazon and Netflix. And the Murdochs get Disney shares (and perhaps some cash to help son James walk away and do his own thing) and they keep the Fox News, sports and business and free to TV assets.

So Comcast pays $US34 billion - which is a smaller cost than close to $US100 billion for Sky and the Fox assets and Disney gets the Fox assets, less what Comcast pays for the 39% of Sky. Of course Disney could be tempted to pay the full $US71.3 billion and hold onto the 39% stake in Sky that is part of the Fox deal.

Comcast and Disney would then control Sky - but Disney would be up for the cost of supporting Sky News for 15 years - over 1.5 billion pounds or around $US2 billion.

View More Articles By Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.



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