Rupert Murdoch’s dream of taking full control of Sky dissolved on Saturday night as he was outbid by the US firm Comcast. But anyone celebrating a setback for the mogul should be warned. The most divisive figure in Britain’s media may still have the last laugh.
Murdoch’s abrasive and headline-grabbing era in charge of Sky came to an end in a high-stakes auction. There was no head-to-head face-off across a boardroom table: it was a simple email that sealed the future of Sky after a bruising battle between Fox and Comcast.
Shortly after 7pm the City of London Takeover Panel issued a short statement: Comcast had tabled a knockout £30bn bid, which was swiftly recommended to shareholders by Sky’s independent directors.
Attention is now focused on what one of the most successful and criticised men in media business history will do next. In common with the battling media family on the Sky Atlantic TV show Succession, there are questions about where Murdoch will focus his business efforts, whether he can continue to maintain his current level of political influence, and when anyone – in or outside his family – will take over from the 87-year-old.
In any eventuality Murdoch was already on the way out of Sky, the business he founded in west London in the late 1980s and built into a major force in the pay-TV world. Last year he agreed a separate deal to sell most of his 21st Century Fox company to Disney, including his existing 39% stake in Sky. As a result, even if Murdoch’s bid had been victorious on Saturday evening, his stint as the undisputed king of British satellite television would probably have lasted only a matter of weeks before he was replaced by Mickey Mouse as Sky’s figurehead.
Laith Khalaf, an analyst with Hargreaves Lansdown, said: “Ultimately Fox was comprehensively outgunned in the battle for Sky, though Rupert Murdoch will still remain a big player in the global media. However, out-and-out control over Sky proved a bridge too far, though Fox still owns 39% of the company, and it remains to be seen what Disney does with that holding.”
Murdoch’s influence over the worldwide news business is unlikely to be weakened by the Sky defeat. He will continue to control News Corp, the newspaper and publishing business he split from his TV and film interests at the peak of the phone-hacking scandal. He will also retain control of the cable channel Fox News, where he has been a regular feature in the office, leaving him in charge of a global news business that also includes the Wall Street Journal, the Times and the Sun in the UK, and the publishing business HarperCollins.
In addition to maintaining good relations with Donald Trump, his ability to influence politics in his native Australia remains solid; he was recently blamed for the departure of the prime minister Malcolm Turnbull.
Murdoch shows no sign of retiring. He suffered a bad fall on his son’s yacht at the end of last year, forcing him to rehabilitate at home and prompting speculation about the state of his health. But he has since recovered, to be featured in paparazzi pictures on the beach with his wife, Jerry Hall.
In addition, his financial position is improved by cashing in on the enormous demand for media businesses as the industry goes through a round of consolidation that is driving up prices. He will also become a substantial shareholder in Disney, albeit with less control than he used to enjoy at Fox.
The Comcast deal is likely to have a bigger impact on the Murdoch dynasty. James Murdoch, currently chief executive of 21st Century Fox and chairman of Sky, is set to leave the family business as a result of the Disney deal, despite at one point being tipped for a top job at the combined business.
His older brother, Lachlan, is now is a better position to take over what remains of the Murdoch conglomerate, having returned to the fold in 2014 and currently serving alongside his father as executive co-chairman of News Corp.
The Sky takeover still requires shareholder approval, but there will be rejoicing among senior Sky executives, set for a payday worth hundreds of millions of pounds thanks to a performance-related bonus scheme. Nearly half of all Sky employees – including some at Sky News – are on an employee share scheme, which could see them receive healthy payouts from the takeover.
Alice Enders, of Enders Analysis, a media research service, said Murdoch had no real influence on this deal. She said: “The Murdochs have been out the picture since the Fox merger agreement with Disney was signed. They sold out to Disney. They didn’t make any decision in this auction.”
Despite this, she said, the high price bid by Comcast was “a ringing endorsement of a company that Mr Murdoch built from square one”.
“They don’t have any cash,” she said of the family. “The whole idea of Rupert is not to have a huge amount of cash around and to tie it up in a lovely company called Disney. They then have this big stake in Disney and it’s a company they trust. The whole destiny of the Murdoch empire is already wrapped with Disney, then with New Fox, and then with News Corp.”
Crucially, it is possible that Disney could complete its purchase of Murdoch’s Fox and then hang on to its 39% minority stake in Sky in order to frustrate Comcast. One solution proposed by some analysts could be another high-value swap, with Disney’s Sky shares exchanged for Comcast’s stake in the US streaming service Hulu.
Disney, which is also preparing to launch its own streaming service to rival Netflix, could equally cash in on the Sky shareholding, which is now worth about £12bn after Comcast bid more than necessary to win the auction.
The Comcast deal has been a bonanza for some hedge funds, as Sky shares more than doubled over the year. One firm sitting on an enormous profit is Odey Asset Management, run by Crispin Odey, who helped to bankroll the Brexit campaign. In another sign of the complex web of connections that tie the British political, media and business worlds together, Odey was once married to Murdoch’s daughter Prudence.