- Comcast, the owner of NBCUniversal, has made a surprise £22 billion, or $US30.7 billion, bid for Sky.
- 21st Century Fox, which owns 40% of Sky, has been trying to buy the remaining stake since the end of 2016 but has faced repeated regulatory hurdles.
- Comcast’s offer is a 16% premium to 21st Century Fox’s most recent bid.
- Comcast says it is “confident” it can get its deal approved.
LONDON – The US entertainment giant Comcast has made a surprise bid for Sky, the British broadcaster that Rupert Murdoch is trying to bring fully into his media empire and sell to Disney.
Comcast announced its bid on Tuesday, offering £12.50, or $US17.45, a share for the company. The bid represents a premium of £1.45 ($US2.02) on Monday’s closing price for Sky shares and a 16% premium on the latest offer from Murdoch’s 21st Century Fox. The deal would value Sky at £22.1 billion ($US30.9 billion).
Sky’s shares jumped over 18% at the open in London on Tuesday, putting them above Comcast’s offer price and suggesting investors anticipate a bidding war.
Comcast, which owns TV networks such as E! and NBC as well as Universal Pictures, said the deal represented a “strategic opportunity to acquire a leading content and distribution business in the UK and Europe.”
Brian L. Roberts, Comcast’s chairman and CEO, said in a statement: “We think Sky is an outstanding company. It has 23 million customers, leading positions in the UK, Italy, and Germany, and is a consistent innovator in its use of technology to deliver its customers a great experience.
“Sky has a proud record of investment in news and programming. It has great people and a very strong and capable management team.”
Liberum’s media analyst, Ian Whittaker, said in a note to clients on Tuesday morning: “There is a strong rationale for Comcast to acquire Sky as it would give it immediate leadership positions in the UK, German and Italian Pay-TV markets and a presence in Spain.
“At the moment, Comcast does have presence in these markets mainly through its NBC Universal film and TV assets but this would give it a very powerful distribution pan-European network.”
Crashing Murdoch’s deal
Sky is known in Europe for its live football broadcasts as well as for premium content such as HBO’s “Game of Thrones” and in-house productions such as “Fortitude” and “Britannia.”
Murdoch’s 21st Century Fox owns 39.1% of Sky, which Murdoch helped found in the 1990s. Murdoch has long coveted the remaining 61%, with a previous £8 billion ($US11.2 billion) takeover attempt derailed by the News of the World phone-hacking scandal in 2011.
21st Century Fox restarted takeover plans at the end of 2o16 but has repeatedly run up against regulatory hurdles. The UK’s competition watchdog said in January that the deal would be “against the public interest,” giving the Murdoch family what it considered too much control over UK media.
Fox has already agreed on paper to sell its stake in Sky to Disney as part of a $US52.4 billion (£37.5 billion) package of film and TV assets. At the time the deal was announced, 21st Century Fox said it remained “committed to completing its proposed acquisition of the shares in Sky it does not own.”
Comcast was one of the interested bidders in Fox’s entertainment assets, according to multiple reports.
Comcast ‘confident’ it can get the deal done
One of the competition watchdog’s main objections to Murdoch’s taking full control of Sky was the fact he would be able to exert pressure on Sky News’ editorial line. The 86-year-old already fully owns The Times of London, The Sun, and The Wall Street Journal, and the UK watchdog feared full control of Sky would give him too much control.
In a statement, Comcast’s Roberts said his company was “confident that we will be able to receive the necessary regulatory approvals.”
“While Comcast does own a substantial international operation in the UK, with more than 1,300 employees, the Company has only a minimal presence in the UK media market,” Comcast said in its bid document. “Comcast therefore does not believe that this Superior Cash Proposal should create any media plurality concerns in the UK.”
Liberum’s Whittaker said: “We expect this deal to go through as we do not think Fox (or Disney, who are acquiring the Sky assets as part of their purchase of various Fox assets) will want to get into a bidding war, especially given the complications surrounding Sky News.”
Comcast said it planned to keep Sky headquartered in Osterley, would maintain its staffing levels, and would invest in creating more high-quality content. Roberts said Comcast thought the Sky deal could increase the US giant’s international revenue to 25% of sales from 9%.
“We hold the management of Sky in high regard and would welcome the opportunity to meet with them and the independent directors of Sky to discuss our plans for the business, particularly with respect to maintaining Sky’s strong platform in the UK,” Roberts said. “In due course, we very much hope that the independent directors will recommend our proposal.”
The boutique London firm Robey Warshaw advised Comcast on the offer along with the investment banks Evercore and Bank of America Merrill Lynch.
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