Published: Sun, September 23, 2018
Entertaiment | By Simon Arnold

Comcast outbids Fox with $39 billion offer for Sky in auction

Comcast outbids Fox with $39 billion offer for Sky in auction

Comcast won a three-round auction for Sky on Saturday, with a £17.28-per-share deal that nearly certainly puts enough distance between it and rival bidder 21st Century Fox to win the battle for control of the European pay-TV heavyweight.

Comcast has won the long-running battle for control of Sky after beating Fox with a £30 billion bid for the broadcaster. With Sky in the fold, Comcast's worldwide revenue will go from 8% of its total to 25%, according to Imperial Capital.

Fox still owns 39% of Sky, and it's unclear how Comcast, Fox, and Disney - clear rivals - will work together, should Comcast close the deal for the majority Sky stake.

Roberts added, "Comcast intends to use Sky as a platform for growth in Europe".

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 US market as viewers switch to video-on-demand services like Netflix (NFLX.O) and Amazon (AMZN.O). "I still think it may look a bit cheap in a couple of years".

Comcast expects to complete the Sky acquisition before the end of October. Sky is Europe's largest pay-television operator, with 22.5 million customers in seven countries and popular programming including English Premier League soccer and Game of Thrones. It has been boosting its investment in original TV productions such as 1920s sex-and-crime saga "Babylon Berlin" and "Britannia", a period drama about the Roman conquest of Britain.

Netflix, meanwhile, has relied on other companies' broadband networks to distribute its lavish in-house productions and expand its global subscriber base to 130 million.

Crucially for Comcast, Sky has a growing video-streaming business. Comcast estimates that owning Sky will create US$500-million in synergies, partly through selling Sky content in the U.S. and NBC programming in Europe.

What does this mean for Sky customers? It would also represent a victory in Comcast's checkered history of dealmaking.

Since then, Fox has agreed to sell most of its entertainment assets to Disney.

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

Disney's $71 billion deal for Fox brought it franchises such as the "X-Men" and hit shows like "The Simpsons".

Fox struck a philosophical tone in the wake of the auction Saturday, depicting its loss to Comcast as a victory of sorts. "Sky has never stood still, and with Comcast our momentum will only increase".

Like this: