January 2017


Rupert Murdoch's 21st Century Fox To Buy Sky For $14.6 Billion

Rupert Murdoch's 21st Century Fox will pay $ 14.6 Billion ( ` 102,000 Crores) for 61% of European DTH platform 'Sky'. Murdoch already owns 39% of Sky, and this deal will provide him full ownership of the company.

Fox will pay 10.75 pounds per Sky share. This is a 40% premium over the market price when the bid was made. The deal will require approval of at least 75% of Sky's independent shareholders.

Sky has 22 million customers in Britain, Ireland, Italy, Germany and Austria.

The deal price became particularly attractive for Murdoch after Britain's exit from the EU, which saw the pound lose 15% against the US dollar.

21st Century Fox is one of the world's largest entertainment companies, with a broad portfolio of broadcast, cable, DTH & films.


The deal come 5 years after Murdoch failed to buy Sky when a newspaper phone hacking scandal at one of his tabloids derailed a previous offer.

Clearly Murdoch wants to grow his media empire beyond the UK to the EU. He is often quoted for having said "When I go into Downing Street, they do what I say; when I go to Brussels, they take no notice." Critics says Murdoch could only launch Sky because Margaret Thatcher persuaded the EU to change laws on content.


Since then, the 85-year-old media mogul has split his b u s i n e s s into 2 parts: Fox which owns the TV assets & News Corp, holding his newspaper portfolio.

Fox' cable and broadcasting properties include STAR India, Fox News Channel, Fox Business Network, FOX, National Geographic Channels, 28 television stations in the U.S and over 300 international channels.

News Corp assets include the Wall Street Journal; HarperCollins - one of the world's largest publishing companies, Dow Jones & Company. Its UK publications: News UK, Times of London, Sunday Times, Sun & Sunday Sun empire, account for 40% of newspaper readership in the UK.


The price at which News Corp will acquire the share is a topic of hot debate. One view is that the shareholders are receiving less than fair value.

Polo Tang, A respected media analyst at UBS says "Sky stands at an inflection point after a period of heavy investment in broadband and high-definition TV. Earnings per share should improve from 62.6p last year to more than 100p by 2020. His target for Sky, as a standalone business, is 27% above the value of the offer from 21st Century Fox.

The pro Murdoch camp points out that the Murdochs could have chosen to be nastier & made a hostile offer at a mere 20% premium and taken majority ownership. They credit the independent directors for sticking to their demand for a 40% premium and ensuring that 75% of outside shareholders must approve the deal.


Competition lawyers and analysts believe the new structure, with 2 separate holding companies will circumvent laws that require media plurality. Critics continue to protest that both companies are in fact controlled by Murdoch and his sons James and Lachlan.

Fox said it expected the acquisition to complete before the end of 2017. n