Saturday, 21 July, 2018

Comcast challenges Murdoch with offer to buy Sky

Sky Q box with splash of colours coming out of Comcast challenges Murdoch with offer to buy Sky
Nellie Chapman | 01 March, 2018, 13:57

The proposed offer pits Comcast against Murdoch, the 86-year-old media tycoon who helped launch Sky in Britain, and also against Walt Disney Inc, which has agreed to buy a string of assets from Fox once the deal is done, including Sky.

Sky shares rose more than 19% on Comcast's offer.

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. "Just as with Comcast, adding more worldwide distribution (direct to consumer) and content production is strategic to countering Netflix, Amazon, etc.", the banks' analysts said in a flash note.

Shareholders feeling short-changed by Murdoch greeted Comcast by sending Sky shares soaring as much as 23 percent. Disney fell 4.5% to hover around $104.87 while Fox ebbed 3.3% to the $37.14 range.

NBC and Universal Pictures owner Comcast has made a £22.1 billion takeover approach for Sky in an attempt to trump 21st Century Fox's efforts to seize full control of the United Kingdom broadcaster.

Fox's bid to buy the 61 percent of Sky it does not already own has been slowed by regulatory problems in Britain.

Another element in Comcast's thinking was Sky's success earlier this month in winning the rights to show Premier League soccer matches for a fee well below analyst expectations, boosting its future earnings and lifting its shares. "Notably, the word "satellite" never even appears in the investor presentation that accompanies this morning's conference call, nearly as if they are hoping no one notices".

"Once you're in a bidding war, it's not about fair value, it's about what do you think it's worth", Odey added.

Comcast will have to twist themselves into knots to explain why satellite distribution won't be just as obsolete in Europe as it already is in the U.S.

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

Comcast's Roberts, the son of Ralph who founded the company in 1963, called Sky's Deputy Chairman Martin Gilbert on Tuesday morning to notify him just before the offer statement was released, and called Sky CEO Jeremy Darroch shortly afterwards. "It's not for us, here today, to go beyond the fact that we have a superior proposal on the table that we're quite proud of". The deal would boost Comcast's global revenues from nine to 25 percent.

Some Sky shareholders have also started to complain that the offer was too low.

Comcast set the minimum acceptance condition for its Sky offer at 50% of Sky shares plus one.

Murdoch had been edging towards a deal for Sky in recent weeks, eight years after he first tried to buy the company.

The primary problem is a preliminary finding by the competition regulator that a Fox takeover would give the Murdoch family too much control of Britain's media.

Sky offers a wide range of entertainment, business and, sports programming.

A spokesman for May said the deal was a commercial matter.

The boutique London firm Robey Warshaw advised Comcast on the offer along with the investment banks Evercore and Bank of America Merrill Lynch.