Sky's Value Unaffected as Fox Referred to Regulators

Equity analysts say there is minimal difference between the Murdoch family’s influence with 100% control of Sky and its influence with 39% control

Morningstar Equity Analysts 12 September, 2017 | 3:56PM

Karen Bradley, the UK Culture Secretary, has referred 21st Century Fox’s bid for the 61% of Sky (SKY) that it doesn’t already own to competition regulators. We are not surprised with her decision and have actually been expecting it for quite some time. The concerns relate to whether the Murdoch family will have too much control over the UK’s broadcasting industry.

In our view, there is minimal difference between the family’s influence with 100% control and its influence with 39% control. We don’t think the legal separation of the television operations, such as Sky, into 21st Century Fox from the newspaper businesses within News Corp will significantly influence the regulator's position, as the Murdochs ultimately control both.

However, the reach of the Murdochs' newspaper empire has shrunk dramatically since Fox’s previous attempt to buy Sky in 2010, with the majority of British people now receiving news from the internet or other non-Murdoch media companies. Thus, we see limited legal grounds to stop the merger.

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Morningstar Equity Analysts  Morningstar stock and fund analysts cover 2,000 mutual funds, 2,100 equities, and 300 exchange-traded funds.

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