What does Comcast's Sky offer mean for Murdoch - and Disney?

James Marshall
March 1, 2018

One of the top ten shareholders in Sky has welcomed Comcast's surprise bid to hijack 21st Century Fox's planned £18.5 billion takeover of the pay-TV broadcaster, as the City prepares for a bidding war.

The proposed offer pits Comcast against Murdoch, the 86-year-old media tycoon who helped to launch Sky in Britain, and also against Walt Disney which has agreed to buy a string of assets from Fox once the deal is done, including Sky. Fox already owns 39 percent of Sky, and additional global assets only makes its business that much more appealing to Disney.

If 21st Century Fox wished to counter Comcast's offer, it would likely need approval from Disney.

Fox's bid has been held up by a British government review to determine whether Fox and the Murdoch family that controls Fox is a fit owner for the company. "Perhaps worst of all, this morning's bid doesn't really put to rest the idea that they might still try a topping bid for Fox's USA assets, including the rest of Sky, if the AT&T/Time Warner deal is approved", he wrote. Sky has a proud record of investment in news and programming.

Roberts also said Comcast was prepared to co-own Sky with Disney if they Comcast had the majority stake, though Comcast prefers to own the broadcaster outright. Cavanagh and Comcast chairman and CEO Brian Roberts were asked about persistent Wall Street chatter over a potential new Comcast takeover offer for parts of Fox. They spent at least an hour at a Sky store going through every feature and comparing it to Comcast's own X1 platform, which lets subscribers search for movies and TV shows through a Netflix-like user interface and a voice-activated remote control, Roberts said on the call.

Shares in Sky surged Tuesday upon the announcement of Comcast's interest.

So a Comcast takeover of Sky could require Disney to revise its proposed takeover of Fox. Comcast, which owns Universal Pictures, is a major Disney competitor and unsuccessfully attempted to acquire Fox previous year.

Its rival offer of £12.50 a share is much more generous than Fox's £10.75. He's already been the subject of concerns from the competition regulator about the amount of influence he would have over Britain's media. In the United Kingdom, the news sent Sky shares soaring.

21CF was bidding for Sky ahead of selling a range of assets to Disney, including its Sky shareholding.

Comcast's offer for all of Sky puts immediate pressure on Fox to raise the acquisition price first reached with Sky brass in December 2016.

Roberts said he and other Comcast executives had visited Sky stores and operations in London.

If Comcast closes on the deal, interational revenues will rise to 25 percent of the total from 9 percent. The implementation of the European Commission's Digital Single Market strategy in 2018 will pave the way for Sky to offer both its OTT NOW TV service and its Sky Q service to a larger target audience.

Other reports by Click Lancashire

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