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US media giant Comcast challenges 21st Century Fox with £22.1bn Sky interest

Comcast (Swiss: CMCSA.SW - news) has raised the prospect of a bidding war for Sky (Frankfurt: 893517 - news) , the owner of Sky News, by announcing plans for a £22.1bn takeover offer.

The US cable operator confirmed its interest in taking a majority stake as a 21st Century Fox deal to buy the 61% of Sky it does not already own remains held up by regulatory clearances .

Comcast said its possible all-cash offer of £12.50 per Sky share represented a premium of 16% on the current Fox terms, which value Sky at £18.5bn.

The announcement saw Sky's share price soar. It closed the day up 20.4% at £13.30.

Comcast's interest further complicates the uncertainty over Sky's future ownership as Fox has agreed to sell its entertainment assets to Disney - including its 39% Sky stake - for $52bn (£37bn).

Brian Roberts, chief executive of Comcast, said: "We think that Sky would be very valuable to us as we look to expand our presence internationally.

"The UK is and will remain a great place to do business. We already have a strong presence in London and Comcast intends to use Sky as a platform for our growth in Europe.

"We intend to maintain and enhance Sky's business."

Comcast is the biggest cable operator in the US and already owns TV networks including and NBC and E! and the Universal Pictures movie studio.

By raising the value attributed to Sky, the company's move piles pressure on Fox to match it.

Comcast said its proposals would ensure the future of Sky News - the main sticking point for regulators in Fox's takeover plans because of Rupert Murdoch's major interests in the UK media sector.

It said its "minimal presence" in UK media meant there would be no concerns about plurality - essentially diversity of opinion.

In January, the competition regulator said in its provisional findings the Fox offer would not operate against the public interest in terms of either Fox or Sky having a genuine commitment to UK broadcasting standards.

But it warned that, in terms of the need to maintain plurality in the UK media, the takeover could potentially act against the public interest.

Fox responded by pledging to strengthen the independence of Sky News ahead of the Competition and Markets Authority's final report, which must be submitted by 1 May.

The final decision rests with Matt Hancock, the Secretary of State for Digital, Culture, Media and Sport, who is then due to give a ruling on the proposed takeover within 30 working days.

21st Century Fox responded to the news of Comcast's interest by saying: "21CF remains committed to its recommended cash offer for Sky announced on 15th December 2016.

We note that no firm offer has been made by Comcast at this point. A further statement will be made if appropriate."

Sky said: "The Independent Committee of Sky notes today's announcement from Comcast regarding a possible all cash offer for Sky at £12.50 per share (the "Possible Offer").

"The Independent Directors of Sky are mindful of their fiduciary duties and their obligations under the UK Takeover Code.

"Since no firm offer has been made at this point, shareholders are advised to take no action.

"A further announcement will be made as and when appropriate."

Downing Street described Comcast's interest was a commercial matter.

Commenting on the share price reaction Laith Khalaf, senior analyst at Hargreaves Lansdown (Frankfurt: DMB.F - news) , said: "Comcast has gazumped 21st Century Fox with a better takeover offer for Sky shareholders.

"The successful conclusion of the Premiership football rights auction has moved the dial for Sky, which secured more games at a lower cost than last time around.

"Indeed the fact that Sky shares were already trading at 30p above Fox's offer price tells us the market was expecting an improved offer from somewhere.

"As it is, Comcast has thrown its hat into the ring and is now seeking to meet with the Sky directors to flesh out the deal.

"There may well be some reaction from 21st Century Fox. However, since the bid for Sky was launched, 21st Century Fox has agreed to sell many of its assets, including Sky, to Disney. It remains to be seen therefore what appetite Rupert Murdoch has to pursue Sky any further.

"This isn't a done deal yet though. Sky shares are now trading 2% above the Comcast offer price, so the market clearly smells the scent of some more action before this saga draws to a close."