Thursday, 24 January, 2019

Comcast out-muscles Fox in £29.7-billion deal for Sky

Last night’s deal reflected Brian Roberts’ determination to win Last night’s deal reflected Brian Roberts’ determination to winDREW ANGERER GETTY IMAGES
Stacy Diaz | 23 September, 2018, 20:24

Comcast is battling it out with Rupert Murdoch's 21st Century Fox and its powerful soon-to-be owner Disney in a rare auction, which includes up to three rounds of bidding created to culminate in two final offers for Europe's biggest pay-TV broadcaster.

A banker from one of Britain's leading boutique advisory firms pressed the button on Comcast's (CMCSA.O) knockout $40 billion bid for broadcaster Sky (SKYB.L). But with help from Fox, Iger succeeded in driving up the price that Comcast ended up paying for Sky.

Murdoch, whose 21st Century Fox has already agreed to sell a major swag of its entertainment programming interests, including a 39 percent stake in Sky TV, to Disney for an agreed price, therefore won't get to share in the Comcast largesse.

Brian Roberts, Comcast's chief executive, was based in a hotel in London's West End for the duration of the auction, according to a source with knowledge of the matter. "Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team". However, Comcast would become the controlling owner if Sky shareholders approve the bid.

Acquiring Sky would also expand the content and distribution model that Roberts has embraced since buying NBCUniversal seven years ago.

Comcast out-muscles Fox in £29.7-billion deal for Sky

Murdoch's son James, now chairman of Sky, was instrumental in building the company into the leading European pay TV group, with operations in Britain, Ireland, Germany, Austria and Italy, and more than 23 million customers attracted to its top-flight sport and entertainment content.

In addition to its satellite TV service, Sky offers a video streaming option called Now TV, which has about 2 million subscribers.

Adding Sky would mean Comcast generates a fourth of its sales outside of the US, up from 9 per cent now. Comcast estimates that owning Sky will create $500 million in synergies, partly through selling Sky content in the US and NBC programming in Europe. It would also represent a victory in Comcast's chequered history of dealmaking. That may have been an astute move by Iger, with Fox's 39 percent stake in Sky now worth much more.

If Fox had outbid Comcast, Sky would have fallen into Disney's hands next year as part of its $71-billion Fox takeover deal struck in July. An earlier attempt was thwarted in 2011 by a phone-tapping scandal at his United Kingdom newspaper business.

"Sky is a remarkable story and we are proud to have played such a significant role in building the incredible value reflected today in Comcast's offer", the company said.