The Murdoch’s Now Have to Walk the “Middle Road”
The Murdoch Family, aka Rupert & Sons parted with the Star of their profitable Fox News Channel.
On the other side of the pond their bid to buy the 61% of Sky Plc (L.SKY) they do not already own is still on track.
But, like all complex business deals things can be derailed. There are about 8 months to go before expected completion of the transaction
British regulators say that they will issue their evaluation of the bid by 16 May. They are examining whether 21st Century Fox Inc.(NASDAQ:FOX), and by extension The Murdoch Family, pass a so-called “fit and proper” test to hold a broadcast license.
PM Theresa May’s government have to juggle this issue now just weeks before a general election.
No one is predicting the outcome because of the rareness of such reviews and the Murdoch’s complex history in the UK, where their last move at Sky collapsed due to a cellphone-hacking scandal at it British Tabloid.
Also, many stakeholders do not like the idea of Fox 2X’ing down on a mature European pay-TV business.
So far, Sky’s weak results have been useful to the Murdoch’s.
UK revenue growth slowed to 2.6% in F-Q-3 compared with a year earlier, well below the 4-7% rises of recent years. Customer churn remains high. Profit was hurt by the phasing in of more expensive rights for English Premier League soccer. These problems were foreshadowed by a weak share price last year, thus giving Fox the chance come back to the buying table.
Sky is a well-run company in a reasonably robust sector. In Q-3, Sky added more customers than expected in Germany, with 73,000 new arrivals. Group revenue met expectations, and the 5% sales growth in 1st 3 Q’s of the financial year was not bad.
Now back to Bill O’Reilly
Mr. O’Reilly banishment from Fox did nothing to close the discount on the Sky share price, suggesting the market does not think it would have any bearing on the UK “fit and proper” test.
As we see it there has been nothing to arouse an activist Sky shareholder arguing that Fox should pay more, or one to create a revolt at Fox HQ.
So, now Middle of the Road suits The Murdoch’s best in this waiting game for Sky.
|HeffX-LTN Analysis for FOX:||Overall||Short||Intermediate||Long|
|Neutral (-0.17)||Bearish (-0.35)||Neutral (-0.21)||Neutral (0.04)|
Have a terrific weekend.