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Comcast outbids Fox with $40 billion winning offer for Sky

LONDON (Reuters) – Comcast (CMCSA.O) beat Rupert Murdoch’s Twenty-First Century Fox (FOXA.O) in the battle for Sky (SKYB.L) on Saturday after offering 30.6 billion pounds ($40 billion) in a dramatic auction to decide the fate of the pay-television group.

The U.S. cable giant bid 17.28 pounds a share for control of London-listed Sky, bettering a 15.67 pounds-a-share offer by Fox, Britain’s Takeover Panel said.

Buying Sky will make Philadelphia-based Comcast, which owns the NBC network and Universal Pictures, the world’s largest pay-TV operator with around 52 million customers.

Chairman and chief executive Brian Roberts has had his eye on Sky as a way to help counter declines in subscribers for traditional cable TV in its core U.S. market as viewers switch to video-on-demand services like Netflix (NFLX.O) and Amazon (AMZN.O).

“This is a great day for Comcast,” he said. “This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally.”

Comcast’s knock-out offer thwarted Murdoch’s long-held ambition to win control of Sky, and is also a setback for U.S. entertainment giant Walt Disney (DIS.N) which would have likely been its ultimate owner.

  • Fox plans to concede defeat in Sky battle, review stake: source

Disney has agreed a separate $71 billion deal to buy most of Fox’s film and TV assets, including its existing 39 percent stake in Sky, and would have taken full ownership after a successful Fox takeover.

Comcast’s final offer was a jump on its bid going into the auction of 14.75 pounds, and compares with Sky’s closing price of 15.85 pounds on Friday.

Comcast believed it needed to deliver a knock-out blow given that Fox’s existing stake in Sky gave it a chance of victory if it was a close second to Comcast, two sources said.

Its final offer – more than double Sky’s share price before Fox made its approach in December 2016 – quickly won the backing of Sky’s independent directors on Saturday.

“We are recommending it as it represents materially superior value,” said Martin Gilbert, chairman of Sky’s independent committee. “We are focused on drawing this process to a successful and swift close and therefore urge shareholders to accept the recommended Comcast offer.”

Fox noted the recommendation, saying it was considering options for its 39 percent stake and would make another announcement in due course.

“Sky is a remarkable story and we are proud to have played such a significant role in building the incredible value reflected today in Comcast’s offer,” Fox said.

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Fox’s holding, which Comcast’s offer values at more than $15 billion, stems from Murdoch’s role in the creation of the company nearly three decades ago.

His younger son James was pivotal in building Sky into Europe’s leading pay-TV operator as its former chief executive and current chairman.

Comcast, which requires 50 percent plus one share of Sky’s equity to win control, said it was also seeking to buy Sky shares in the market.

HUGE PRICE

One fund manager who holds Sky shares said nobody could complain about the Comcast price.

“The question now is if Fox actually sells out and if not can Comcast get to 50 percent,” he said.

One banker involved in the auction said: “Did Comcast pay a lot more than they needed to?”

Sources familiar with the matter said Fox, Disney and Comcast had not been in discussions about the 39 percent stake.

The auction was a dramatic climax to a transatlantic bidding battle waged since February, when Comcast gate-crashed Fox’s takeover of Sky.

It is a blow to 87-year-old Murdoch, who tried to buy Sky eight years ago only for the bid to collapse in the fallout from a phone-hacking scandal at his British newspaper business.

Some politicians have opposed a deal, citing concerns about the influence Murdoch would wield over the UK’s news agenda.

Fox made a string of concessions to assuage those worries and land a company that serves 23 million households in Britain, Ireland, Germany, Austria and Italy.

Sky’s chief executive Jeremy Darroch said Comcast’s victory was the beginning of a new chapter. “Sky has never stood still, and with Comcast our momentum will only increase,” he said.

($1 = 0.7648 pounds)

Additional reporting by Maiya Keiden and Liana Baker, editing by Alistair Smout and Hugh Lawson

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Fox plans to concede defeat in Sky battle, review stake: source

LONDON (Reuters) – Rupert Murdoch’s Twenty-First Century Fox (FOXA.O) expects Sky’s (SKYB.L) independent directors to recommend Comcast’s (CMCSA.O) $39 billion bid, after which Fox will concede defeat in the battle for the British broadcaster, a source with knowledge of the matter told Reuters.

Fox will also review options for its 39 percent stake in Sky after Comcast outbid Murdoch’s group with a 17.28 pounds a share offer for the pay-television group, the source said.

Reporting by Ben Martin, Editing by Paul Sandle

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U.S. airlines score win as Congress drops ‘reasonable fee’ rules

WASHINGTON (Reuters) – The U.S. airline industry scored a win on Saturday as bipartisan congressional legislation dropped plans to mandate “reasonable and proportional” baggage and change fees, but included other new passenger protections.

After weeks of negotiations, a 1,200-page bill to reauthorize the Federal Aviation Administration (FAA) was unveiled early Saturday that would require the FAA to set minimum dimensions for passenger seats — including legroom and width — and prohibits airlines from involuntarily removing passengers from flights after they’ve cleared the boarding gate.

In April 2017, video went viral on social media of 69-year-old passenger David Dao being dragged from a United Airlines (UAL.O) flight at Chicago’s O’Hare International Airport after he refused to give up his seat to make room for crew members. United apologized and promised not to remove seated passengers to make room for other passengers.

But airlines had heavily lobbied against new rules limiting fees. U.S. airlines revenue from baggage and reservation change fees increased from $5.7 billion in 2010 to $7.5 billion in 2017. Other fees are not reported to regulators.

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The compromise bill did not include language adopted by a Senate Committee in 2017 that would have required the reasonable fee rules. It was struck in a compromise unveiled by Senate Commerce Committee Republican chairman John Thune and House Transportation and Infrastructure Committee chairman Bill Shuster, a Republican, along with the top Democrats on the two committees Senator Bill Nelson and Representative Peter DeFazio.

Congress is set to vote on the measure next week ahead of a September 30 deadline.

American Airlines Group Inc (AAL.O) became the latest major airline on Thursday to hike checked bag prices by $5 for the first bag to $30, joining Delta Air Lines Inc (DAL.N), United and JetBlue Airways Corp (JBLU.O).

Airlines for America, an airline trade group, has said the fee provision would result in “government-mandated price controls” and should be rejected and the Trump administration also strongly opposed the provision.

The bill also requires the U.S. Transportation Department to set new rules authorizing commercial drone deliveries and gives the Justice Department and Homeland Security Department new authority to disable or destroy drones if they pose a threat to government facilities after the Trump administration warned it did not have the legal authority it needed to address threats.

Under the bill, airlines must refund passengers for services they paid for but did not receive and will enshrine in law a prohibition on passengers making mobile phone calls while in flight or using e-cigarettes.

The bill requires airlines to allow passengers to check strollers if they are traveling with a small child and require regulators to determine if it is unfair or deceptive for airlines to tell passengers “that a flight is delayed or canceled due to weather alone when other factors are involved.”

It also makes it unlawful for any person to place a live animal in an overhead storage compartment, prompted by outrage over the death a dog in March in an overhead compartment of a United flight. It also gives the Transportation Department authority to require airlines to allow pregnant passengers to board earlier.

The bill would also authorize a return of “supersonic” transport with reduced sonic booms, and provides for an additional $1.68 billion in immediate funding for disaster relief in the wake of Hurricane Florence.

It also directs the FAA to establish an Office of Spaceports to provide guidance, support licensing for spaceports, and promote infrastructure improvements for future space travel.

The bill also addresses sexual misconduct in aviation by creating a task force to review practices and increases civil penalties for interfering with cabin or flight crew members.

Reporting by David Shepardson

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BT approaches Worldpay’s Philip Jansen to be new CEO: Sky News

LONDON (Reuters) – BT Group (BT.L) is in advanced talks to appoint payment technology provider Worldpay’s (WP.N) outgoing co-chief executive Philip Jansen as its new CEO, Sky News reported on Saturday.

Worldpay said on Wednesday that Jansen would step down at the end of the year.

Asked about the report, a spokeswoman for BT said: “We don’t comment on speculation.” Worldpay was not immediately available for comment.

In August, Sky reported that the boss of Informa had been approached for the CEO role, and there were several other candidates.

Reporting by Alistair Smout; editing by John Stonestreet

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China cancels trade talks with U.S. as tariff threats escalate: WSJ

SHANGHAI (Reuters) – China has canceled upcoming trade talks with the United States and will not send vice-premier Liu He to Washington next week, the Wall Street Journal reported, citing sources.

The Wall Street Journal said a mid-level delegation was due to travel to Washington ahead of Liu’s visit, but the trip has now been abandoned.

Earlier this week, China added $60 billion of U.S. products to its import tariff list as it retaliated against U.S. duties on $200 billion of Chinese goods set to go into effect from Sept. 24.

Reporting by David Stanway; Editing by Nick Macfie

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Adviser says U.S. close to Mexico-only NAFTA deal, Canada unmoved

WASHINGTON (Reuters) – The United States is getting “very, very close” to having to move forward on its trade deal with Mexico without Canada, White House economic adviser Kevin Hassett said on Friday.

There is just over a week to go before a U.S.-imposed Oct. 1 deadline to publish the text of a deal to update the North American Free Trade Agreement, and the United States and Canada have still not agreed on terms, Hassett told Fox News Channel.

“We’re still talking to Canada, and we’re getting very, very close to the deadline where we’re going to have to move ahead with Mexico all by themselves,” said Hassett, who chairs the White House Council of Economic Advisers.

Washington reached a bilateral trade deal with Mexico in late August and is threatening to exclude Canada if need be.

Canadian Foreign Minister Chrystia Freeland left Washington on Thursday after two days of inconclusive talks with U.S. Trade Representative Robert Lighthizer.

Asked for a reaction to Hassett’s comments, a Freeland spokesman pointed to her repeated comments that Canada “will not be driven by a deadline but by reaching a good deal”.

Investor concerns over the future of the 1994 pact, which underscores $1.2 trillion in annual trade, have regularly hurt stock markets in all three countries, whose economies are highly integrated.

A senior White House official on Friday said he hoped Canada would agree to join the U.S.-Mexico trade deal by the end of the month, adding he thought U.S. lawmakers would support a bilateral deal with Mexico if that did not happen.

But Canada says it does not believe U.S. President Trump has the power to unilaterally turn NAFTA into a two-nation agreement. U.S. business groups and some senior Democrats say NAFTA must be preserved as a trilateral grouping.

Access to Canada’s dairy market, trade dispute settlement panels and U.S. demands for the ability to impose auto tariffs on its northern neighbor remain sticking points.

“I’m a little surprised that the Canadians haven’t signed up yet,” Hassett said.

“I worry that politics in Canada is trumping common sense because there’s a very good deal that was designed by Mexico and the U.S. to appeal to Canada. And they’re not signing up and it’s got everybody over here a little bit puzzled.”

Freeland and Lighthizer are due in New York next week for the United Nations General Assembly, but it was unclear if they would meet.

Additional reporting by David Lawder in Washington and David Ljunggren in Ottawa, writing by David Lawder; editing by Chizu Nomiyama, Bernadette Baum and Susan Thomas

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Mexico will seek deal with Canada if NAFTA talks fail: Lopez Obrador

MEXICO CITY (Reuters) – Mexico’s incoming government will pursue a bilateral deal with Canada if talks to overhaul the North American Free Trade Agreement falter, Mexican president-elect Andres Manuel Lopez Obrador said on Friday.

After more than a year of talks to modernize the NAFTA trade pact between the United States, Mexico and Canada, the United States and Mexico reached a side deal in late August.

Days later, Canada began negotiating with the United States to close a deal on the 24-year-old trade pact. But the talks have hit an impasse over U.S. threats to impose tariffs to Canadian auto exports.

“We would like the government of the United States and the government of Canada to come to an agreement so the treaty can be trilateral, as it was originally signed,” said Lopez Obrador, a veteran leftist who takes office in December.

“But in the event that the governments of the United States and Canada do not come to an agreement … we would have to maintain the bilateral deal with the United States and seek a similar deal with Canada.”

With just over a week to go before a U.S.-imposed Oct. 1 deadline to publish the text of a deal, the United States and Canada have still not agreed on terms, White House economic adviser Kevin Hassett said on Friday.

Speaking with Fox News Channel, Hassett said the United States was getting “very, very close” to having to advance in its commercial deal with Mexico, leaving Canada behind.

Markets in all three countries have suffered amid uncertainty about the future of the pact, which underpins $1.2 trillion in annual trade.

Reporting by Diego Ore, writing by Julia Love; Editing by James Dalgleish

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Dow hits new closing high ahead of index reshuffle

NEW YORK (Reuters) – Industrials led the Dow to a new closing high on Friday ahead of Monday’s major sector reshuffle, capping a week that largely shrugged off trade worries.

Trading volume spiked to the highest level since Feb. 9 in anticipation of the SP 500 sector change, when telecoms will be folded into a new sector called communications services, along with heavy-hitting stocks such as Facebook Inc (FB.O) and Walt Disney Co (DIS.N).

While the Dow closed higher, the SP 500 and the Nasdaq ended the session in negative territory. The SP and the Dow posted weekly gains, with the Dow showing its biggest weekly percentage advance in over two months. The Nasdaq lost ground on the week.

“Quadruple witching,” when stock options and futures expire, and the rebalancing of the SP 500 and the Russell 2000 indexes also contributed to heavier traffic.

“A lot of those changes have been anticipated by the index funds, and they’ve prepared for it,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “But there’s a lot going on.”

Boeing Co (BA.N), the United States’ biggest exporter to China, boosted trade-sensitive industrials .SPLRCI higher. The sector led the Dow’s advance.

Yields on long-dated U.S. Treasuries edged down on Brexit anxieties even with Federal Reserve expected to hike key interest rates next week. Financial stocks .SPSY headed lower, ending their recent rally.

“Any time there is a rate hike you potentially see a flattening of the yield curve, which is not good for financials,” said Ghriskey.

The Dow Jones Industrial Average .DJI rose 86.52 points, or 0.32 percent, to 26,743.5, the SP 500 .SPX lost 1.08 points, or 0.04 percent, to 2,929.67 and the Nasdaq Composite .IXIC dropped 41.28 points, or 0.51 percent, to 7,986.96.

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Telecoms .SPLRCL rose 1 percent on its last trading day as a discrete major SP sector, and was the index’s biggest percentage gainer.

All of the FAANG momentum stocks ended the session lower, with Facebook, Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O), Netflix Inc (NFLX.O) and Google parent Alphabet Inc (GOOGL.O) down between 1.1 percent and 1.9 percent.

Shares of security and alarm company ADT Inc (ADT.N) jumped for a second day in a row, closing up 5 percent as Amazon introduced its new Alexa Guard service which could notify ADT of disturbances in the home.

McDonald’s Corp (MCD.N) rose 2.8 percent after announcing it would hike its quarterly dividend by 15 percent.

Under Armour Inc (UAA.N) gained 2.9 percent following an upgrade by JPMorgan Chase.

A 2.9 percent drop in shares of Micron (MU.O) helped pull chipmakers lower after the company said U.S. tariffs on Chinese goods would weigh on its financial results for as much as a year.

Shares of Pier 1 Imports Inc (PIR.N) plunged 19.9 percent after the home furnishings retailer cut its second-quarter forecasts.

Advancing issues outnumbered declining ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.

The SP 500 posted 56 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 64 new highs and 46 new lows.

Volume on U.S. exchanges was 10.77 billion shares, nearly 64 percent higher than the 6.57 billion average over the last 20 trading days.

Reporting by Stephen Culp; Editing by Meredith Mazzilli

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United Airlines pilots resist contract changes over regional routes

(Reuters) – United Airlines (UAL.O) pilots said they refuse to budge on the wording of their contract governing the outsourcing of regional flights.

President of the U.S. No. 3 carrier, Scott Kirby, has called for changes to the so-called “scope clause” which sets guidelines on the size of planes that can be operated by regional feeder carriers, among other things.

A scope clause restricts planes heavier than 86,000 pounds (39,000 kg) with more than 76 seats from regional routes, where pilots are generally paid less than their mainline counterparts.

“We are holding the line,” said Todd Insler, chairman of the unit of the Air Line Pilots Association that represents United pilots. “We have no intention of degrading scope.”

The United negotiations are being watched by other airlines entering labor talks, along with commercial planemakers Embraer SA (EMBR3.SA) of Brazil and Mitsubishi Heavy Industries Ltd (7011.T) of Japan, which are building new planes that are too heavy to be flown by regional carriers because they exceed the scope clause weight.

A United spokesman could not immediately be reached for comment. Kirby has said changing the scope clause would make the carrier more competitive against rivals American Airlines (AAL.O) and Delta Air Lines (DAL.N).

Insler disagreed with that.

“We won’t use regional jets to disadvantage our mainline employees, pilots, flight attendants, anyone else,” Kirby told analysts at a conference earlier this month. “Having competitive scope, however, is really important to being the best. We can’t have one hand tied behind our back and try to compete with AA and Delta.”

Pilots have asked United to shift flights from regional carriers to the main airline because smaller carriers use less-efficient 50-seater planes and have faced problems recruiting pilots in a competitive market, according to Insler.

Major carriers have generally been reluctant to make regional flights part of the mainline operations, citing higher costs. “It’s very difficult to make those aircraft work at any mainline airline,” United Chief Financial Officer Gerald Laderman told analysts at a conference earlier this month.

Reporting by Allison Lampert in Montreal; Additional reporting by Tracy Rucinski in Chicago; Editing by Bill Rigby

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