Sky News Says It Could Shutter Without 21st Century Fox Buyout

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Odey's comments come after CNBC said that Disney recently discussed buying Fox's movie and TV production studio studios, cable networks FX and National Geographic and global assets such as the Star network in India and its stake in Sky.

Fox had previously sought to avoid a CMA investigation by promising it would allow editorial independence at Sky News and that it would keep investing in the channel for at least five years should its deal to take control of Sky be approved.

Because of the size of the deal, Disney and Fox would be required to file with the government before they could consummate the agreement.

An acquisition would exclude Fox News because Disney can not own two broadcast networks, the report said.

Disney could benefit from 21st Century Fox's television properties as it gets ready to launch a streaming service. Needham & Co. Managing Dir Laura Martin said the deal could be worth $20-30B "depending how tough Fox wants to be with the negotiations" ("Power Lunch", CNBC, 11/6).

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One Wall Street said any potential asset sale will not come cheap.

That's because, long before it became a blockbuster studio that would be bought by Disney in 2009 for $4 billion, Marvel sold off the film rights to several of its popular characters to various studios. It also wouldn't buy Fox's sports programming properties because combining them with ESPN could present antitrust issues. The two companies are also thought to not be now in discussion, though talks could resume soon. "For those that have the National Football League now, it is the most important piece of programming, so the risk would be the next set of negotiations should drive up prices, and if you're smaller, it's going to cost you a lot more on earnings than it would if you were bigger" ("Squawk Box", CNBC, 11/7). The proposed purchase would have made Disney a more "formidable media conglomerate at a time when AT&T is trying to swallow" Time Warner (L.A. TIMES, 11/7).

Representatives of Disney and Fox had no comment.

Whether the deal goes through or not remains to be seen, however analysts are now suggesting that because of Disney's surging stock price - fuelled by all these rumours - means that a deal may be too lucrative for Fox to give up. So, while there's no deal yet, we wouldn't be surprised if "The Simpsons" is proven right once again.

The report did not include a price that Disney may have offered 21st Century Fox. Nathan: "So now if they start to way overpay for original content, they could - 10 years from now - find themselves in a very similar situation" ("Fast Money", CNBC, 11/6).

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