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Comcast Outbids Fox for Sky With Offer of £17.28 Per Share

Jeff Baumgartner
9/22/2018

Comcast has reached for -- and grabbed -- Sky.

Ending a protracted bidding war and giving it a big win on the other side of the pond, US-based Comcast has outbid 21st Century Fox for control of Sky, the UK-based video giant that has about 23 million subscribers.

According to a statement issued Saturday by the UK's Takeover Panel, Comcast Corp. (Nasdaq: CMCSA, CMCSK)'s bid of £17.28 (US$22.59) per Sky ordinary share beat out Fox's bid of £15.67 (US$20.49).

Comcast's winning bid, valued at about $39 billion, followed a rare, three-round blind auction that happened earlier on Saturday. (See Eurobites: Auction to Settle Sky Takeover Tussle.)

About that big bid... Comcast wanted to ensure that it paid enough of a premium to sway shareholders that were inclined to side with 21st Century Fox /Walt Disney Co. (NYSE: DIS), based on their 39% stake in Sky, according to CNBC, which noted that Fox and Comcast must now announce their revised offer for Sky by Monday, September 24, and follow with a formal offer on or before Thursday, September 27.

"A knockout bid was the only way to settle this battle and to secure Europe's most prized pay TV asset," independent media sector analyst Paolo Pescatore said in a statement to Light Reading. "This is unsurprising given the value that Sky will bring to the company in the future."

The offer now moves to the Sky board and shareholders for approval, with a deadline of October 11, per CNBC.

CNBC added that another source familiar with the situation at Comcast told the outlet that Disney might consider selling its 39% stake in Sky at the same price.

If Comcast is able to close out the Sky deal, it will give the company a significant video foothold in Europe even as its US cable strategy starts to focus on broadband and "connectivity" while video there morphs into more of a supporting player. (See Video Playing 'Supporting Role' as Comcast Focuses on Connectivity .)

Update: "This is a great day for Comcast," Comcast chairman and CEO Brian Roberts said in a statement issued Saturday. "This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally … We now encourage Sky shareholders to accept our offer, which we look forward to completing before the end of October 2018."

Fox has a deal in place to sell most of its entertainment properties (including its current stake in Sky) to Disney. Comcast had already dropped out of the running for Fox as it instead focused its energies on acquiring Sky.


Home in on the opportunities and challenges facing European cable operators. Join Light Reading for the Cable Next-Gen Europe event in London on Nov. 6. All cable operators and other communications service providers get in free!


Looking ahead, Pescatore noted that "[a]ttention now quickly turns to integration with minimal impact on the business. However, you have to expect some cost cutting measures." He also believes the combo of Comcast and Sky will be "a considerable force" and to expect to see other US and Asian providers make similar moves for other European content and media assets.

"Sky and its customers will now benefit from being part of the wider group; access to more services, products and features," Pescatore added. "And financial security to some extent to bid for key costly premium content rights; in particular sports, which is arguably the company's prized asset with the Premier League."

Read more about the chase for Sky:

— Jeff Baumgartner, Senior Editor, Light Reading

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Jeff Baumgartner
Jeff Baumgartner
9/23/2018 | 8:40:00 PM
Other implications
As Comcast tries to get this deal salted away in the days and weeks to come, there's going to be much analysis of the implications of it beyond that it will give Comcast a significant presence across the pond and more scale to its video business. Three things to chew on:

-With respect to competition, the acquisition of Sky will pit Comcast against Liberty Global in some European markets. That changes the landscape considerably as Comcast and Liberty Global have been collaborative partners with efforts like RDK Management and in other areas. How does this deal change the ongoing relationship between Comcast & Liberty Global?

-What happens to Hulu? Via the Fox deal, Disney will own 60% of Hulu. Will there be some wheeling and dealing to have Comcast lock up Fox's stake in Sky and maybe have Disney move to buy out the other Hulu owners, including Comcast and AT&T (which got its 10% stake in Hulu from its ia its acquisition of Time Warner Inc.) ?

-On the technolgy front, will Comcast eventually look to unify its video platform in the US and in Europe by eventually shifting Sky's offering to X1 and RDK, a move that would give Comcast more scale for its platform and drive some of the operational benefits?

 

JB
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