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Explainer: Comcast and Murdoch's Fox in regulatory race for Sky approval

Reuters  |  LONDON 

By Kate Holton

LONDON (Reuters) - Comcast's of Rupert Murdoch's eight-year campaign to buy pay-TV group has sparked a regulatory race with

Fifteen months after finally agreeing a takeover of Sky, Murdoch had been edging towards approval by offering remedies to overcome long-held concerns that he holds too much in Britain, where he owns the Sun and newspapers.

But Comcast, the owner of NBC and Universal, has made investors a higher offer with no political baggage for a business that Murdoch helped to launch and owns 39 percent of.

Fox has called on regulators to submit to the same lengthy scrutiny it received, but competition lawyers say it could gain clearance in a relatively fast probe.


offered 12.50 pounds per share, or 22.1 billion pounds ($31 billion). It has not yet made a firm bid and is sounding out investors through its brokers, BAML, sources say.

It wants to own all of but will accept taking control with 50 percent plus one share if Fox decides not to sell its 39 percent stake. Fox has a separate deal to sell assets to Walt Disney, including


Murdoch agreed to buy the 61 percent of it did not already own in December 2016 for 10.75 pounds per share, valuing the entire business at 18.5 billion pounds.

This followed a failed attempt to buy in 2010, which collapsed when journalists at one of Murdoch's papers admitted hacking into phones to secure news, sparking a criminal trial, a public inquiry and questions over his role.


One person familiar with the matter said was asking hedge fund managers how much stock they controlled, indicating a belief that Fox will hold on to its stake and setting the stage for a lengthy battle.

said the price could go as high as 1500 pence, driven by the fact has continued to develop its technology since Fox's bid and last month secured the rights to show matches for a lower fee than expected, boosting future earnings.

will need 82 percent acceptance from independent shareholders while Fox is targeting 75 percent, meaning 15 percent of independent investors could block the deal.


is providing information to the and believes it can get approval in the so-called Phase 1 of the investigation, avoiding a prolonged process. It could take several weeks before files a formal notification.

will examine whether a Comcast-owned could be anti-competitive when dealing with rival channels on its platform and whether there is a threat from putting in the same company as film studio

The regulator could also consider if would be owned by companies holding three of the six major film studios if owns 61 percent and Walt retains Murdoch's 39 percent.

would argue that were Fox or to retain 39 percent, they would be a financial investor with no commercial or operational link with

In terms of previous conduct, was accused by U.S. regulators in 2012 of breaching a condition imposed when it bought NBC Universal, by discriminating against rivals in favour of its own channels when placing them on the programme guide.

says it appealed the decision and the two sides settled in 2014. It also agreed to pay $2.3 million to resolve a federal investigation into allegations it wrongfully charged customers for services they never authorised.

In Britain, has been involved in some minor breaches of broadcasting rules for airing offensive language, breaking impartiality and advertising rules, and it was sanctioned and fined in 2012 for broadcasting soft porn during the day on a channel that could be watched by children.

Fox has called on regulators to examine all these issues.

But Howard Cartlidge, of EU and Competition law at DWF, said a larger pattern of offences would need to be proved to force a longer EU investigation: "I don't see there being significant regulatory hurdles."

Lawyers do not expect the to launch a public interest test either as does not own newspapers - the issue that has caused so many delays for Fox.


The EU cleared Fox's 2016 bid in a Phase 1 investigation on competition grounds, however British politicians, wary of appearing close to the Murdoch family, have bounced the deal to local regulators on the issue of and standards.

UK regulators accepted Fox would uphold broadcasting standards, saying that sexual harassment allegations at the network in the U.S. did not call into question its commitment to standards in Britain.

On media plurality, the said in January the deal should be blocked unless a way is found to prevent the Murdochs from influencing the network's operations.

Fox has since pledged to keep independent and fully funded for 10 years. Lawyers and analysts said that should be enough to secure regulatory approval.

Fox sees the fact it has almost received regulatory approval as a competitive advantage over It is pursuing the takeover because it is part of its larger deal with

"With now being the for rather than Fox, we think political opposition to the deal may be easing," said.


After notification, has 25 working days to analyse Comcast's deal during Phase 1. Any offer of remedies could add 10 working days.

For Fox, the UK regulator will give its final report to government by May 1 and a final decision will come by mid-June.

($1 = 0.7209 pounds)

(Additional reporting by Ben Martin and Paul Sandle; Editing by Alexander Smith and David Evans)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, March 09 2018. 23:23 IST