A Disney Sky News buyout is latest in a series of dramatic offers, counter-offers, and acquisitions surrounding pay-TV group Sky.

There are three groups that want to take control of Sky, as well as its cable news channel. However, each of them face varying difficulties in doing so.

As a result, there are a series of complex business transactions taking place to determine the fate of Sky News and its parent company Sky.

Who wants to own Sky?

21st Century Fox

The most prominent group that wants to take over Sky News — as well as its parent Sky — is 21st Century Fox, owned by the Murdoch family.

News Corp, the Murdoch family’s business, launched Sky in 1989. It already owns 39% of the brand through News Corp.

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In 2013, News Corp was made defunct as it split into News Corporation and 21st Century Fox. The shares in Sky went to 21st Century Fox.

Even when it was still the old News Corp the company was trying to take full control of Sky. However, regulators have managed to outfox the Murdochs at every turn.

The problem is that if News Corp had control of Sky News, regulators allege, it would have too much control over the British media.

The Murdoch family already owns the new News Corp which in turn owns newspaper the Sun and the Times. It also owns the Wireless Group which operates various radio stations including Talksport, Talkradio, and Virgin Radio UK.

The UK media regulator, the Competition and Markets Authority (CMA), will make a recommendation about the ownership of Sky to Matt Hancock, the UK culture secretary. He is the only person with the overall authority to reject or approve it.

The CMA has said will recommend Hancock blocks the takeover unless Fox can prove that the Murdoch family will not have the ability to influence the editorial direction of Sky News.

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Disney

The Walt Disney Corporation is now part of these negotiations.

That’s because Disney is currently trying to buy most of 21st Century Fox. The only parts of 21st Century Fox which will be exempt from the Disney deal are the Fox News channels in the US.

If the deal goes through, Disney will acquire 21st Century Fox’s 39% stake in Sky. It has also indicated that it would pursue the same goal as 21st Century Fox: to buy the other 61% of Sky.

This wouldn’t present so much of a regulatory issue as, unlike the Murdoch family, the Walt Disney Corporation does not already have a significant presence in the UK news sphere.

Disney chief executive Bob Iger has said he is “committed” to Sky News.

The only barrier to Disney gaining control of Sky is whether or not US regulators allow the Disney 21st Century Fox deal to go through.

It seems unlikely that there will be a huge amount of political pressure against the deal, at least from the US president. Trump and Murdoch are said to be good friends.

This is in stark contrast to the AT&T Time Warner merger which Trump argued against, possibly because he dislikes Time Warner’s news service CNN and its coverage of his presidency).

Another regulatory barrier in Disney’s takeover of Fox is the latter’s attempted takeover of Sky. Disney obviously wants to take over Fox as quickly as possible. Therefore it has a vested interest in helping Fox with their Sky negotiations.

Comcast

The final contender in the battle for Sky is another US media giant, Comcast.

Comcast is, like Disney, a mass-media owner. It owns film studios including DreamWorks and Universal, television networks such as NBC, and various cable television and internet services.

When the company launched its £22.1 billion ($30.9 billion) offer for Sky, Brian Roberts, chairman and chief executive of Comcast said:

“We think that Sky would be very valuable to us as we look to expand our presence internationally. The cash proposal values each Sky share at £12.50 in cash — a significant premium to the 21st Century Fox price currently recommended.

“We would like to own the whole of Sky and we will be looking to acquire over 50% of the Sky shares. We are confident that we will be able to receive the necessary regulatory approvals. If successful, the acquisition will enhance our free cash flow per share in the first year.”

However, Simon Jack, business editor at BBC News proposes an ulterior motive for Comcast. He alleges Comcast is attempting to buy Sky in a “bid to derail Rupert Murdoch’s carefully laid plans to sell Fox to Disney”.

What is happening with Sky News?

At the centre of all these deals sits Sky News.

21st Century Fox can’t takeover Sky because of Sky News, putting spanners in the works for its own takeover bid. That could also have implications for 21st Century Fox’s sale to Disney.

Meanwhile, Comcast is preparing to pay over the odds for Sky. It will buy shares for up to £12.50 each, compared to Fox’s £10.75 per share offer. Fox and Disney will both want to stop Comcast so they can take control of Sky. However, they can’t do so because of the regulatory issues around Sky News.

So what’s going to happen with the Sky News-shaped elephant in the room?

A split in the Sky:

The suggestion that Fox made on 3 April could provide a neat solution to the issue.

Fox wants to split Sky into Sky, the satellite pay-TV service, and Sky News. The two would act as completely separate companies.

Sky News would have an entirely separate board to the other half of Sky. No members of the Murdoch family would sit on the Sky News board, preventing them from influencing editorial decisions. However, 21st Century Fox would go on financing Sky News for the next 15 years.

Disney would then buy and fund the newly separated Sky News and presumably run it too. Disney would continue to run Sky News even if its takeover of 21st Century Fox does not go ahead.

21st Century Fox could then go on to buy the other 61% of Sky.

At some point after that, Disney would get 100% of the newly separated Sky if it successfully completes its acquisition of 21st Century Fox.

That would leave Comcast out in the cold.

What has been said about all this?

In its statement announcing this plan 21st Century Fox executives said:

We are aware that a group of politicians that is opposed to the transaction is seeking to influence the CMA and is making a number of unsupported and fanciful assertions.

If the CMA were to accept at face value these assertions and be dissatisfied with enhanced remedies that are a direct and reasonable response to concerns it had raised with us, we believe that this would compromise the integrity of a system which is supposed to be objective, evidenced-based and grounded on the application of established legal principles.

In its own statement, Disney added:

To secure CMA approval Fox has proposed to the CMA that it would divest Sky News to Disney as a condition of Fox’s acquisition of the remainder of Sky.

Disney would buy Sky News and agree to sustain the operating capital of Sky News and maintain its editorial independence.

A summary of how the Disney Sky News buyout will work:

As one might guess, all of these business maneuvers are quite complex.

So here’s the timeline of the proposal:

  1. Fox buys the rest of Sky. It now owns 100% of Sky
  2. As part of its agreement with the CMA, Fox splits Sky. Sky News becomes a separate company out of the control of the Murdoch family. It finances Sky News in the interim
  3. Disney buys Sky News and takes over financing it
  4. At some point, Disney’s acquisition of Fox goes through. As part of the deal Disney get all of Fox’s shares in Sky
  5. Disney now owns Sky News and all of the rest of Sky.

When Disney owns the whole lot, presumably it would have the option to merge Sky News and Sky back together.

It’s all a very roundabout way of transacting this business. However, it might also prove the only way to prevent Comcast from taking Sky before Disney can take over Fox.