Disney Pledge to Buy Sky's News Unit Clears Regulatory Path for Fox Consolidation

Approval could touch off another bidding war with Comcast
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The Walt Disney Co. has agreed to purchase Sky News, a move that will help push 21st Century Fox’s plan to consolidate the news unit's parent Sky and in turn could intensify the looming bidding war for the U.K. satellite TV giant and several Fox properties.

U.K. Secretary of State for Digital, Culture, Media and Sport Matthew Hancock said Tuesday that the Disney purchase of Sky News meets his criteria for the larger deal -- Fox's plan to consolidate the remaining 61% interest in Sky it doesn’t already own. His statement starts a 15-day comment period on the Fox deal. Earlier, Hancock said another offer for Sky – from Comcast, made in April – wouldn’t require regulatory scrutiny. Comcast has also made a separate formal offer for the other Fox assets.

Disney already has made a $68 billion bid for certain Fox assets, including its 39% interest in Sky, in December. In April, Disney told U.K. regulators that it would separately purchase Sky News, and vowed not to sell the operator for 10 years and to boost its operational budget. On Tuesday, Hancock said Disney has committed not to sell Sky News for 15 years, will boost its annual budget to $130 million and has committed to preserving its editorial independence.

“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,” Hancock said in a statement.

Related: Sky ‘Welcomes’ Comcast Bid

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Hancock’s statement doesn’t mean Disney will end up with Sky. That will be up to Sky’s board of directors, which is currently evaluating both offers. Also in April, Sky’s board withdrew its recommendation for shareholders to accept the Disney bid, in light of the new Comcast offer.

Related: The Hunt is On

Fox has been trying to consolidate its interests in Sky for several years, but has butted heads with regulators who were concerned the deal would place too much power in the hands of Fox’s controlling shareholders, the Murdoch family.

In a statement Fox said it “welcomes” Secretary’s Hancock’s announcement, adding that it can “now look forward to a final decision clearing our transaction.”

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