British Regulator Wants the Fox-Sky Deal Blocked



Deal provisionally rejected

Twenty-First Century Fox (FOX)(FOXA) recently suffered a blow to its efforts to take full control of Sky, a leading television company in Europe (EFA). After reviewing a proposal from Fox to acquire Sky, British regulator the CMA (Competition and Markets Authority) said the deal was not in the public interest.

In its provisional findings, the CMA noted that a Fox-Sky merger would hand Rupert Murdoch too much influence over Britain’s media industry. Murdoch is an executive co-chairman of Fox. The Murdoch family also controls News Corp (NWSA), which owns newspapers in the United States (SPY) and the United Kingdom (EWU).

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Fox already owns 39% of Sky

Sky agreed to sell to Fox for nearly $16 billion, the price of the 61% stake in the company that isn’t under the control of Fox already. Fox already owns 39% of Sky. In its $52.4 billion assets trade deal with The Walt Disney Company (DIS), the 39% stake in Sky was among the assets Fox agreed to transfer.

The rejection of Fox’s proposal to acquire Sky isn’t expected to derail its assets sale to Disney because it already owns the stake in Sky that it agreed to transfer.

The deal isn’t dead yet

But the CMA’s provisional rejection of the proposal to combine Fox with Sky doesn’t mean the deal is dead. Britain’s media secretary is expected to decide the deal’s fate in the coming months. Plus, Fox and Sky could resort to solutions, such as divesting certain assets to gain regulatory approval for the deal.

Fox’s fiscal 2017 revenue (for the period ended September 2017) grew 4.4% to $28.5 billion.


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