Rupert Murdoch’s media empire News Corp this week made an indicative £12.3bn, or 700p a share, bid for the 61% of pay-TV operator BSkyB it doesn’t already own. Sky rejected the offer but said it would be open to a deal worth 800p or more. Any new offer is likely to come only after the two companies have secured regulatory pre-approval from the European competition authorities, while the UK regulator may also get involved.
What the commentators said
Sky has always been “unfinished business” for Rupert Murdoch, said Alistair Osborne in The Daily Telegraph. He was forced to sell Sky equity after the cost of setting it up just over 20 years ago almost bankrupted News Corp. Today, his timing looks good. The weak pound lowers the price for US-based News Corp. Sky’s free cash flow is set to double over the next five years as heavy investments in broadband and high-definition TV begin to pay off, according to Numis. Moreover, owning Sky outright would allow him to integrate it fully into his news empire, said Gideon Spanier in the Evening Standard. Sky content can be put on his newspapers’ paywalled websites, for instance.
Given that the two companies clearly intend to tie the knot, the key issue now is whether there are any serious regulatory obstacles, especially if British authorities decide to look at the deal, said Robert Peston on BBC.co.uk. Their past pronouncements make clear that they “already treat Sky as effectively controlled by News Corp”. But ultimately the decision could rest with Business Secretary Vince Cable, said Alex Brummer in the Daily Mail. And he won’t have forgotten that during the election campaign the Murdoch papers’ “dogs of war” were unleashed on the Lib Dems.
BSY: 705p; 12m change 61%