Fox & Disney Forced To Increase Sky News’ Budget To $130M Per Year To Push Through Takeover
UPDATED with Fox comment. The long-running saga of 21st Century Fox’s $15 billion attempt to takeover European pay-TV operator Sky continues after British Culture Secretary Matt Hancock warned Disney would have to increase Sky News’ budget to £100 million ($132 million) to get a deal over the line.
Hancock urged Disney and 21st Century Fox to improve its terms, after the two companies offered a series of undertakings to protect the news broadcaster earlier this year.
He said that Disney would be restricted from selling Sky News for 15 years without the consent of the Secretary of State, would need to be committed to operating the service for 15 years, up from its offer of 10 years, and would need to increase Sky News’ budget to at least £100M per year. Finally, it would require a formal commitment from Disney to preserve the editorial independence of Sky News.
It’s understood that Sky News’ current budget is around £90M per year.
In official response filed with the SEC in the U.S., Fox said it “welcomes today’s announcement” by Hancock and affirmed that it has “committed to increase its funding of Sky News to 15 years under Disney’s ownership. We now look forward to a final decision” approving the transaction.
“Following the successful conclusion of these discussions and the resolution of these issues, I am today publishing updated undertakings offered by 21CF along with new undertakings offered by Disney for the divestment of Sky News to Disney,” Hancock said.
“In my view, these revised undertakings meet the criteria that I set out to the House on 5 June and will help to ensure that Sky News remains financially viable over the long term; is able to operate as a major UK-based news provider; and is able to take its editorial decisions independently, free from any potential outside influence.”
This comes after Hancock said earlier this month that 21st Century Fox would be allowed to take over European pay-TV firm Sky as long as it divests Sky News to Disney or another company.
“I agree with the CMA that divesting Sky News to Disney, as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified,” Hancock told the House of Commons on June 5.
Hancock will now consult formally with all parties for 15 days and views are sought by 5 PM on July 4.
However, this is likely just the latest step in the saga as Comcast and Disney themselves battle it out to acquire 21st Century Fox, in addition to Comcast’s own bid to acquire Sky directly.