LONDON, UK - Rupert Murdoch's 21st Century Fox has lost control of its prized Sky plc, which was founded by Murdoch and has been controlled by his company, through its 39% stake, since its inception in 1989.
In an unprecedented showdown on Saturday, Fox was outbid for the other 61% of the European broadcaster, by long-time rival Comcast, in an auction undertaken by the UK regulator.
Fox's bid of 15.67 pounds a share was beaten by Comcast's 17.28 pounds a share offer, a difference of 1.61 pounds or 10.27%.
It is being reported as the largest takeover in the history of the media industry in Europe.
"As the price of the final Comcast Offer is materially superior, it is in the best interests of all Sky shareholders to accept the Comcast offer," Sky plc said in a statement Saturday night.
"Accordingly, the Independent Committee unanimously recommends that Sky shareholders accept the Comcast offer, and in order to ensure the successful closing of the Comcast offer, urges shareholders to accept immediately."
Saturday's dramatic duel ends 22 months of uncertainty about Fox's attempt to take over Sky, which has been subjected to UK regulatory hurdles, since Sky shareholders accepted Fox's initial offer of 10.75 pounds a share in December 2016. Comcast entered the fray with an offer on 25 April 2018 of 12.50 pounds per share in Sky, however Fox countered with a bid of 14 pounds a share on 11 July 2018. The regulator then intervened, setting up Saturday's duel.
While Murdoch's Fox has lost out on the main prize, the company will make a huge windfall on the outcome, through the increased value of its holding, which it says it is considering selling to Comcast. When Murdoch first made his move in December 2016, Sky shares were selling at 7.69 pounds. With Comcast's offer on the table of 17.28 pounds, Fox will reap a capital gain of 9.59 pounds per share.
Unfortunately for Murdoch though, the windfall will actually pass to Disney which has agreed to acquire most of 21st Century Fox, including the Sky plc holding.
Saturday's auction will not affect Murdoch's deal with Walt Disney Co., nor will it affect the consideration that Fox shareholders, including Murdoch, will receive.
While Comcast will take over Sky's vast network in the UK and Europe, it will have no interest in Sky Television in Australia and New Zealand, which was taken over by Rupert Murdoch's News Corp in December 2016. The Australian and New Zelaand Sky assets will not be party to the sale to Comcast, or Disney's takeover of Fox.
Brian Roberts, Chairman and CEO of Comcast, described Saturday as "a great day."
"Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team."
"This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally," he said Saturday night.
"We couldn't be more excited by the opportunities in front of us."
He said he expected the deal to conclude by the end of next month, and urged Sky plc shareholders to accept Comcast's offer.
Sky's management appeared excited by the outcome and the potential injection of fresh ideas from its new 'owner.
"This is the beginning of the next exciting chapter for Sky," Jeremy Darroch, Group CEO for Sky, said Saturday night. "Brian and his team have built a great business and we are looking forward to bringing our two companies together for the benefit of our customers and colleagues."
"As part of a broader Comcast we believe we will be able to continue to grow and strengthen our position as Europe's leading direct to consumer media company," the Sky CEO said.
"Today's outcome is down to the hard work of tens of thousands of people who have built and developed this business together over the last thirty years. Sky has never stood still, and with Comcast our momentum will only increase."
21st Century Fox issued a statement saying it was considering its options in relation to it's 39% shareholding and that it will be making a further announcement in due course.
"Sky is a remarkable story and we are proud to have played such a significant role in building the incredible value reflected today in Comcast's offer," the Fox statement said.
Rupert Murdoch in July attributed much of the success of Sky to former CEO Sam Chisholm who had just died. Chisholm joined Sky in August 1990 as the network, and indeed the Murdoch empire, was on the brink of bankruptcy. Three months later Sky merged with BSB and the new BSkyB appointed Chisholm as Managing Director. Chisholm stayed in the role, taking the new BSkyB into the black within two years and to a multi-billion dollar float soon after. A health scare forced his return to Australia seven years later, however by this time BSKyB, now Sky plc, was a raging success. Chisholm received a double lung transplant at St Vincent’s Hospital in Sydney in 2003.
Rupert Murdoch on hearing of Chisholm's death in July this year issued a statement. "Sam Chisholm is unquestionably one of the best executives I have ever worked with," he said. "He led Sky during a transformational decade that put the company on the map, changed UK television forever, and paved the way for the Sky pan-European business we know today."
"The choice of quality of television that British and European viewers enjoy today owe much to Sam's leadership," Mr Murdoch said in his statement.