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Comcast Boosts Sky Bid to $34 Billion, Topping Murdoch Offer

Nick Turner, Joe Mayes
Signage is displayed inside Comcast Corp. headquarters in Philadelphia, Pennsylvania, U.S., on Monday, Oct. 24, 2016. Comcast Corp. is scheduled to release earnings figures on October 26. Photographer: Charles Mostoller/Bloomberg

Comcast Corp. increased its takeover bid for Sky Plc to $34 billion, topping an offer from Rupert Murdoch’s 21st Century Fox Inc. and escalating a global standoff between the media giants.

Comcast, the largest U.S. cable company, is now offering 14.75 pounds a share for Sky, valuing Britain’s top pay-TV provider at 26 billion pounds, according to a statement Wednesday. That’s 5.4 percent above a 14 pound-a-share proposal from Fox, which already owns a stake in the European broadcaster.

The move is the latest twist in an international M&A tussle that also includes Walt Disney Co. Both Comcast and Disney have been vying to acquire Fox’s entertainment assets -- a contest that will affect the Sky bidding war. Comcast, which offered 12.50 pounds a share previously, said the sweetened bid won the backing of Sky’s independent directors and that it has lined up financing.

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Murdoch currently has a deal to sell Fox’s entertainment assets to Disney, including its 39 percent Sky stake. Murdoch’s higher bid for Sky earlier Wednesday put pressure on Comcast Chief Executive Officer Brian Roberts to come back with a higher price.

“There is a possibility Comcast puts a lot of chips backing its Sky bid and is less aggressive in its pursuit of Fox,” said Paul Sweeney, an analyst with Bloomberg Intelligence. The cable giant may “just want international scale.”

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The U.K. government has already said it’s likely to approve the Sky bid from Fox, which satisfied concerns that Murdoch wouldn’t gain too much of a hold over British media. Former Culture Secretary Matt Hancock, who was replaced this week with Jeremy Wright in a cabinet shake-up, had said he was willing to let the takeover go ahead, provided Fox sells Sky’s 24-hour news channel to Disney.

Minority Stake

Fox sought to acquire the remaining 61 percent of the company with its bid, and that business would eventually have gone to Disney -- assuming that transaction also is completed.

Fox initially went after Sky 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.

Comcast has been expected to abandon its bid for Fox and focus instead on winning Sky, according to Jonathan Chaplin, an analyst at New Street Research LLC. “Of all the assets in the Fox portfolio, they probably view Sky as the most strategically important,” he said earlier in a note.

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Sky gives Comcast an opportunity to expand beyond 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. Of the assets he’s seeking to acquire from Fox, Disney CEO Bob Iger called Sky “a real crown jewel.”

Philadelphia-based Comcast said it has already gained regulatory approval in the European Union, Austria, Germany, Italy and Jersey. It expects to complete its takeover of the U.K.-based company by the end of October.

Updates with Sky’s independent directors in third paragraph.

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