Comcast-Fox Battle for Sky May Be Decided in One-Day Auction

(Bloomberg) -- The drawn-out battle for control of Sky Plc is likely to be settled in an abbreviated auction starting this Saturday, in a showdown to seal the fate of Europe's biggest satellite broadcaster.

An auction lasting as little as one day has emerged as the favored structure to end the 26 billion-pound ($34 billion) contest for the U.K. pay-TV company in talks between Britain's Takeover Panel, Sky and the two bidders, 21st Century Fox Inc. and Comcast Corp., according to people familiar with the matter.

The Takeover Panel's standard procedures for an auction involve a five-day process. Details have yet to be finalized and they are still discussing whether to work with sealed or open bids, or a mix of the two, said the people, who asked not to be identified because the deliberations are private.

The Takeover Panel is expected to announce the auction process as soon as today, one of the people said. Sky investors would then have until Oct. 6 to decide to tender their shares to whichever offer they consider is best.

An auction is a rarely used process to settle a major takeover skirmish in the U.K., but will become necessary if neither Fox nor Comcast submit a “best and final” offer for Sky by a Sept. 22 deadline.

Representatives for Sky, Comcast, Fox and the Takeover Panel declined to comment.

Last Leg

The tussle for Sky is the final leg of a fight between Comcast and Walt Disney Co. for the bulk of Rupert Murdoch's media empire. Disney has already beaten off Comcast to secure most of Murdoch's Fox entertainment assets for $71 billion, including its 39 percent stake in Sky. So Disney would get control of Sky if Fox's bid prevails. Comcast's Chief Executive Brian Roberts is still determined to secure Sky.

At stake are the London-based broadcaster's 23 million customers in five European countries and a rare opportunity for Comcast or Disney to diversify out of the U.S. and reach more consumers directly as they try to fend off the growing power of video streaming platforms such as Netflix Inc.

Sky also has a suite of sought-after TV content to lure and retain subscribers, including U.K. rights to Premier League soccer.

Ticking Clock

Britain's top pay-TV company has been in play since December 2016, when Fox offered to buy out Sky's other shareholders. Comcast joined the battle in February, and currently has the highest offer on the table at 14.75 pounds per share. Fox's latest offer stands at 14 pounds per share.

Comcast is the most likely winner in an auction scenario, according to a Bloomberg survey of 17 M&A and event-driven trading desks. On average, the traders bet a winning bid will come in at about 16.53 pounds per share.

Sky shareholders have been preparing for a potential auction over the summer after both Comcast and Fox filed their formal offers, starting a clock set by U.K. regulators.

The battle has sent Sky shares surging 55 percent this year, with strong subscriber growth enhancing its value for the two suitors. The shares traded up 0.5 percent at 15.73 pounds at 12:17 a.m. in London.

--With assistance from Gerry Smith, Christopher Palmeri, David Hellier, Manuel Baigorri and William Canny.

To contact the reporters on this story: Joe Mayes in London at jmayes9@bloomberg.net;Aaron Kirchfeld in London at akirchfeld@bloomberg.net;Anousha Sakoui in Los Angeles at asakoui@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, ;Nick Turner at nturner7@bloomberg.net, Thomas Pfeiffer, Amy Thomson