& cplSiteName &

UK Ruling Sparks Bidding War for Sky

Ray Le Maistre

The UK government has sparked a bidding war for Sky (NYSE, London: SKY) by approving two rival bids for the UK pay-TV giant.

Both Comcast Corp. (Nasdaq: CMCSA, CMCSK) and 21st Century Fox have had their respective bids for Sky approved, though the Fox bid is conditional: Comcast has offered £22 billion (US$29.4 billion), while Fox, which already holds a 39% stake in Sky, is offering to buy the rest of the stock in a deal that values Sky at about £18.5 billion ($24.7 billion). (See Eurobites: Comcast Formalizes £22B Sky Bid , Why Sky's the Limit for Comcast and Comcast Bids $31B to Steal Sky From Fox, Disney.)

Fox's bid had been initially blocked due to media plurality concerns, but has now been approved on the condition that Fox would sell the Sky News operation "to a suitable third party" if its bid was successful.

The decision to approve both bids "opens up a fierce bidding war for Sky... the gloves are now off," according to Paolo Pescatore, vice president of Multiplay and Media at research house CCS Insight . "However, it is unclear what happens to Sky News and who will come in to buy the UK news broadcaster... it will open up other opportunities for US-based companies to buy other media assets in the UK," he adds.

Higher bids are already expected, and indeed priced in, by investors: Comcast's bid values each Sky share at £12.50, yet the pay TV company's share price ended Tuesday trading on the London Stock Exchange at £13.55, giving Sky a market capitalization of £23.2 billion ($31 billion). "This is a great time to be a Sky shareholder," states Pescatore (though, to be clear, we're sure he wasn't referring to himself...).

So which of the two bidders is the best strategic fit for Sky? They both have decent cases, reckons Pescatore, but "the best fit for Sky is Disney," which is on course to acquire Fox. That's because both Disney and Sky are both, at heart, content companies, notes the analyst. (See Disney Buys Fox for $52.4B.)

However, Sky could also be a strategically good for Comcast, giving it a greater international presence, but if Comcast wins the prize that would likely take Sky in a more of a communications networking infrastructure direction as Comcast would seek to play a role in Europe's Gigabit broadband rollout, even though that's not Sky's traditional focus or core strength, notes the analyst. (Sky sells broadband and mobile services but doesn't own and manage its own infrastructure.)

In its most recent full fiscal year (ended June 2017), Sky, which has operations in Ireland, Germany, Austria and Italy as well as the UK, reported revenues of £12.9 billion. It currently has about 23 million customers, of which about 13 million are in the UK and Ireland.

— Ray Le Maistre, Editor-in-Chief, Light Reading

(2)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Sabre
6/18/2018 | 9:06:44 AM
Re: infrastructure
It will be very interesting to watch at this bidding war plays out. It will not be surprising to see other such attempts by the big guys to attempt huge buys of media companies in coming years as they all scratch for gaining super big advantages by those take-overs.
User Rank: Light Beer
6/8/2018 | 6:23:31 AM
"even though that's not Sky's traditional focus or core strength, notes the analyst. (Sky sells broadband and mobile services but doesn't own and manage its own infrastructure.)"

Is this still as true as it once was?

I had thought the same but recently when I mentioned this to someone in conversation they told me Sky have in recent years been building up their own infrastructure. Perhaps that person was mistaken, but would be interested to know.
Featured Video
From The Founder
John Chambers is still as passionate about business and innovation as he ever was at Cisco, finds Steve Saunders.
Flash Poll
Upcoming Live Events
September 12, 2018, Los Angeles, CA
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 6, 2018, London, United Kingdom
November 7-8, 2018, London, United Kingdom
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
All Upcoming Live Events
Hot Topics
T-Mobile to Play the Customer Care Card With Layer3 TV
Jeff Baumgartner, Senior Editor, Light Reading, 8/15/2018
Australia Could Open 5G Door to Huawei
Robert Clark, 8/16/2018
Layoffs at Ericsson's iconectiv
Ray Le Maistre, Editor-in-Chief, 8/10/2018
Should Orange Buy Vivendi?
Iain Morris, International Editor, 8/14/2018
Animals with Phones
When Your Cat Hijacks Your Tech Click Here
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Twitter Feed