Fox-Sky deal talks to hinge on structure



21st Century Fox Inc. and Sky Plc
executives are working with their advisers to nail down final terms of an 11.2 billion-pound ($14.1 billion) deal that would consolidate Rupert Murdoch’s television empire across two continents.
Fox’s co-chairmen, the 85-year-old media baron and his son Lachlan, have been intimately involved in discussions to purchase the 61 percent of UK pay-TV service Sky that Fox doesn’t already own, according to people familiar with the situation. Rupert’s other son James Murdoch, who leads New York-based Fox as chief executive officer and is chairman of Sky, is also a key Fox negotiator.
While the preliminary agreement announced on Friday has the backing of Sky’s independent directors, some elements of the transaction remain under discussion. A key decision for Fox is whether to make an outright offer, or pursue a so-called scheme of arrangement, a structure that would involve UK courts but make it easier to mop up smaller Sky shareholders who refused to sell, said the people, who asked not to be named because the talks are private.
Friday’s announcement was also silent on whether Sky’s CEO, Jeremy Darroch, will stay on once the company becomes part of Fox. People familiar with the matter said the question was undecided but that Fox isn’t in a rush to shake up Sky management. Representatives of Sky and Fox declined to comment.
Sky shares slipped 1.3 percent to 987 pence at 8:07 a.m. London time on Monday, after advancing 27 percent with Friday’s offer. The price remains below the 1,075-pence offer, indicating investors see some risk a deal won’t be completed.
While merger rules allow Fox until Jan. 6 to make a final offer, the company is working to sew up a deal by late this week — Wednesday at the earliest, the people said.

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