Fox boosts its bid for Sky as battle against Comcast continues

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Credit: Simon Dawson/Bloomberg

Rupert Murdoch's 21st Century Fox boosted its bid for Sky, adding pressure on Comcast to retaliate in a global game of chess being waged by the world's biggest media companies.

Fox is now offering 14 pounds per share of Sky, valuing Britain's top pay-TV company at 24.5 billion pounds, or $32 billion. That's 12 percent more than Comcast's rival 22 billion-pound offer.

Now it's up to Comcast to respond.

Sky is a pawn in a wider contest between Comcast and Walt Disney Co. for the bulk of Murdoch's media empire, as the U.S. media giants try to take on powerful digital rivals like Netflix.

Murdoch already has a deal to sell Fox's entertainment assets to Disney, including its Sky stake.

So time is running out for Comcast CEO Brian Roberts to come in with a counter bid in both the battle for the Fox portfolio and for Sky.

"It's like a game of chicken at this point," Brian Wieser, senior analyst at Pivotal Research Group, said in an interview with Bloomberg TV. "All parties involved are attempting—other than Fox potentially—are attempting to inflict damage on the other side while also getting the best out of this."

A spokesman for Comcast declined to comment on how the company will respond.

Fox first went after the 61 percent of Sky it doesn't already own in December 2016, offering 10.75 pounds per share, but was held up over concerns that the tie-up would give Murdoch too much influence over Britain's media.

The U.K. government is now likely to approve Fox's bid for Sky, provided Fox sells Sky's 24-hour news channel to Disney.

"Comcast is likely to lose Fox and focus their resources on winning Sky," Jonathan Chaplin, an analyst at New Street Research, wrote in a note. He estimates Comcast could respond with a bid of 16 pounds a share for Sky. "Of all the assets in the Fox portfolio, they probably view Sky as the most strategically important."

Sky's independent directors accepted the latest Fox offer.

"We welcome this increased offer," Martin Gilbert, deputy chairman of Sky, said in an emailed statement. "This offer reflects the strong position the business is in and is an attractive premium for shareholders."

Sky gives Fox and Comcast a rare opportunity to diversify out of the U.S. and reach more consumers directly. Sky has 23 million customers in five European countries and also boasts a market-leading platform, its Q box, and a suite of premium TV content to lure and retain subscribers, including rights to Premier League soccer. Of the assets he's seeking to acquire from Fox, Disney Chief Executive Officer Bob Iger called Sky "a real crown jewel."

-- Bloomberg News

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