Twenty-First Century Fox's Sky Buyout Hits Further Roadblock
Zacks Investment Research | Sep 12, 2017 10:03PM ET
Rupert Murdoch’s Twenty-First Century Fox, Inc.‘s (NASDAQ:FOXA) proposed acquisition of remaining 61% stake in Europe’s leading pay-TV broadcaster Sky plc hit a further roadblock after U.K. Culture Secretary Karen Bradley demanded detailed review from the Competition and Markets Authority (“CMA”).
Bradley had earlier demanded a review as the deal “potentially raises public interest concerns”. However, what came as a surprise is that she now also wants reviewers to examine the company’s commitment to broadcasting standards.
The U.K.’s Office of Communications commonly known as Ofcom had no problem regarding Twenty-First Century Fox’s capability to match U.K. broadcasting criteria. Earlier, Bradley also had no concerns about the company’s commitment toward broadcasting standards. As the matter is referred for further review the company expects deal to be sealed by Jun 30, 2018.
We believe this is a major setback for Twenty-First Century Fox. The deal which is valued at $15.2 billion will strengthen the company’s position in pay-TV network in Britain, Ireland, Austria, Germany and Italy. As of 2016, Sky already has 21 million pay-TV subscribers and 30,000 employees. Moreover, the deal will reinforce Sky’s position in entertainment and sport, and will also augment adjusted earnings and free cash flow.
Despite this discouraging news mot much movement was witnessed in the company’s share price. However, we noted that the stock has declined 15.1% in the past six months, wider than the the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
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