Twenty-First Century Fox Inc.'s (FOXA long-delayed bid for Sky plc just got a shot in the arm.
The U.K. Secretary of Culture, Matt Hancock, announced on Tuesday, June 5, that the U.K. government would not block the deal as long as its Sky News division is divested to a third party.
Back in December 2016, Fox offered nearly $25 billion for the 61% of the pay TV company that it doesn't own, while Comcast Corp. (CMCSA - Get Report) recently made a rival bid of $31 billion for the majority stake in Sky. Meanwhile, the Walt Disney Co. (DIS - Get Report) has made an offer for Fox's movie and TV assets, including its stake in Sky, a group of assets that Comcast is also preparing its own all-cash bid for.
The U.K. said on Tuesday it wouldn't stand in the way of a bid for Sky, as long as Sky News is sold to a third party, ensuring that it remains financially viable long-term and is able to remain a major and independent U.K.-based news source. If Fox does not agree to those terms, Hancock said the deal would be blocked, but indicated that that would not be his preferred approach.
Disney's acquisition of the Fox assets would primarily be a vertical combination involving film and TV assets, at least in the U.S, while Disney would also reportedly acquire a stake in satellite TV groups in Europe and India. Still, overlapping film and TV properties could raise concerns in Washington. But political considerations may outweigh any economic ones.
"I want to see [Sky News] viable for the longterm," Hancock said on Tuesday.
For its part, Sky on Tuesday released a statement following Hancock's announcement saying that the company "welcomes" Hancock's approval regarding the Fox and Comcast bids for the company.
"The undertakings provided by [Twenty-First Century Fox] have provided a good starting point to overcome the adverse public interest effects of the proposed merger," said the statement.
In morning trading, Fox and Sky shares were up slightly, while Disney was down slightly.