Murdoch Expands TV Empire With 11.7 Billion Pounds Sky Deal

Murdoch Expands TV Empire With 11.7 Billion Pounds Sky Deal
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21st Century Fox agreed to acquire Sky for 11.7 billion pounds, in Rupert Murdoch’s second run at Europe’s dominant pay-TV company, as the media billionaire seeks to consolidate his television empire across two continents, according to Bloomberg.

Fox, which already holds a 39 percent stake in Sky, will pay 10.75 pounds a share for the rest, according to a statement. That represents a premium of 36 percent over Sky’s closing price on Dec. 8, the day before the companies disclosed a preliminary offer. Murdoch is returning after a previous bid was thwarted in 2011 over a phone-hacking scandal at his newspapers.

The deal gives Fox a distribution platform to complement its film studio and cable channels like FX and National Geographic. Sky provides satellite-TV service to 21.8 million customers across the U.K., Ireland, Italy, Germany and Austria, and has been adding exclusive entertainment and original content to its core sports offerings while expanding into broadband and mobile service.

“The combined company will be a global creative and consumer powerhouse,“ Lachlan Murdoch, co-chairman of Fox and Rupert Murdoch’s son, said on a conference call. For the Murdochs, the timing of the deal is right: Momentum behind U.S. stocks continues to build as traders bet that President-elect Donald Trump will follow through on promises to cut regulations and reduce taxes, helping to drive earnings growth. In the U.K., the pound has weakened against the dollar after the Brexit vote, which makes the acquisition cheaper for New York-based Fox.

Murdoch’s Sky bid follows AT&T’s $85.4 billion deal earlier this year to acquire Time Warner, owner of HBO, CNN and Warner Bros., as traditional media push for scale to combat online video services like Netflix and Amazon Prime. Both deals would establish new beachheads for the companies, combining the delivery of content with the content itself.

The U.K. government can ask media regulator Ofcom to check whether the merger might harm plurality in the country’s media. Murdoch may be counting on changes to the media landscape and U.K. politics to clear the way. Unlike when Murdoch’s News Corp. bid for Sky in 2010, Fox doesn’t own any U.K. newspapers and the rise of digital outlets may also work in the bid’s favor, as people rely less on TV, radio and print publications to get their news.