An article in the Sunday Telegraph is lighting a fire under the share price of pay-TV giant Sky (SKY) but Liberum Capital says the revelations of third party interest in Twenty-First Century Fox’s (FOX:NDQ) 39% stake in the company actually makes a full bid less likely.

Sky is up 4.3% to £10.83 on the report which suggest the Murdoch family has turned down two offers in the past 12 months, from Vodafone (VOD) and Vivendi (VIV:PA) respectively, holding out for at least £18 per share.

The Murdoch family's unwillingness to sell is also leading to speculation they may plot a fresh attempt to take full control of the business.


Liberum, reiterating its 'sell' advice and ultra-bearish 530p price target, argues against this thinking. Analyst Ian Whittaker says: ‘it suggests a bid by Fox for the rest of Sky is LESS likely – it would be hard for Fox to argue that Vivendi should pay £18/share for Sky without offering a similar amount to other shareholders, and we do not see Fox doing this.’

Whittaker also highlights a proprietary survey of Sky customers by Liberum which finds, for the second quarter in a row, a sharp increase in propensity to cancel a subscription – up from 20% to 37% over the past six months with 25% citing dissatisfaction with Sky’s product as a main reason for considering cancellation.

We took a detailed look at Sky's strategic position late last year.

Issue Date: 22 Jun 2015