The battle for Sky: what next for Murdoch, Comcast and Disney?

Comcast is attempting to outfox Rupert Murdoch’s attempt to take over Sky, by lodging its own bid for the pay-TV group. Meanwhile, Disney is waiting in the wings with a $66bn (£47bn) bid for Murdoch’s 21st Century Fox entertainment business, which includes a 39% stake in Sky. This complex game of cat and mouse involving three global media heavyweights is set to play out over the summer.

What does Murdoch do now?

Fox, controlled by Murdoch, said it was “considering its options” regarding its £10.75 per share bid for the 61% of Sky it does not already own. In reality, Murdoch is working out how much to sweeten his £11.3bn offer, which values Sky at £18.5bn. But it is complicated. Under the terms of Murdoch’s separate deal to sell Fox to Disney, which includes his current 39% stake in Sky, he must ask for consent to raise his offer. He will have to find £4bn (an extra £2 a share) just to get his nose in front of Comcast’s £12.50 per share (£22bn) bid for Sky. However, he may need to offer well over £5bn more (£5 a share) to win the day.

Can Murdoch win?

The 87-year-old has known since he first lodged his bid for Sky in December 2016 that he was always going to have to pay significantly more to win over Sky’s independent shareholders when they vote on the deal. So he is certainly prepared to take on Comcast. The question is how much does Disney – as Fox’s soon-to-be new owner – want Sky, and how much it will support an improved bid from Murdoch.

What about the UK competition regulator’s investigation into Fox’s Sky bid?

The Competition and Markets Authority is due to deliver its verdict on whether owning Sky – and Sky News – gives the Sun and Times owner Murdoch too much power over UK news media to the culture secretary, Matt Hancock, on 1 May. Murdoch has already offered editorial and financial safeguards, while Disney has offered to buy Sky News to help Murdoch achieve regulatory clearance. If Hancock blocks Murdoch’s deal, the UK takeover panel has said Disney must buy the remaining 61% of Sky it will not own within 28 days of completing its takeover of Fox. Unless, of course, Comcast has already bought Sky.

What does Comcast’s move mean for Disney?

Under the terms of Disney’s deal to buy Fox it cannot make a direct move for Sky without Murdoch’s permission. Disney will rubber stamp a new bid by Fox for Sky, although it will ultimately pick up the tab via extra debt on its balance sheet. Disney will not have to resubmit a fresh bid for Fox in light of Sky’s increased value. Disney is buying a vast array of Fox assets, so it is not known what price it valued Sky at internally. Disney shareholders may not be happy with an increased bid for Sky adding to its debt, but executives would have been well aware that Murdoch’s bid was considered by the market to be a low opening gambit and should have factored that in.

What does Comcast do now?

Comcast is aiming to steal what Disney called the “crown jewel” of Fox’s assets, but its offer is seen by the City as the opening salvo in a bidding war. The company has said it could live with Fox or Disney as minority shareholders if it takes control of Sky.

Who will win?

Comcast is considered to have more financial firepower, so investors believe Disney/Fox will have to think about lodging a new bid of such scale that Brian Roberts, Comcast’s chief executive, will balk at shareholder reaction to a retaliatory offer. Disney and Comcast rate Sky highly and one investor says that with such deep pockets on both sides, it could mean the “bidding gets stupid”.