Challenge to Murdoch: US giant Comcast also bids for Sky
By GREGORY KATZ
Feb. 27, 2018
LONDON (AP) — Comcast, the owner of NBC and Universal Pictures, has launched a bid for European pay TV broadcaster Sky that threatens to thwart a rival offer by media mogul Rupert Murdoch' 21st Century Fox.
The move appears not only opportunistic but aimed at disrupting the European expansion of arch-rival Disney, which is currently looking to take over Fox.
Comcast said Tuesday it is offering 22.1 billion pounds ($29.5 billion) for London-based Sky. The proposed cash deal values each Sky share at 12.50 pounds, which is 16 percent more than what Fox had bid to buy the 61 percent of Sky it does not already own.
"We think that Sky would be very valuable to us as we look to expand our presence internationally," Comcast CEO Brian Roberts said.
Part of what makes Sky attractive to U.S. companies wishing to expand in Europe is that it is an established brand across several countries in the region, where people are often used to paying monthly fees for pay TV.
Sky has 22.5 million customers in the U.K., Austria, Germany, Ireland and Italy who are attracted by its sport offerings like English Premier League soccer but also its film channels and TV shows like "Game of Thrones." Furthermore, Sky provides the telecom services — like internet connections — needed to view its content.
Comcast's move appears timed to capitalize on the trouble Fox has had with British regulators.
The British competition regulator has said in a preliminary finding that a Fox takeover of the entire company would give the Murdoch family too much control of Britain's media. Last month it raised concerns about Murdoch's power because his family trust already controls newspapers such as the Times and the Sun, and the deal would increase its control of the influential Sky News channel.
Fox's bid for Sky is part of a larger corporate network of deals, in which Walt Disney Co. is trying to buy Fox for $52.4 billion. That was made on the assumption that Fox would buy out the rest of Sky, which has been described as the "crown jewel" in the Murdoch empire.
So a Comcast takeover of Sky could require Disney to revise its proposed takeover of Fox. It is likely, for example, to force Fox to offer a higher price for Sky, which would cause Disney to review its own bid for Fox.
"We would be shocked if Fox doesn't raise the bid on the Sky asset," said Daniel Ives, chief strategy officer at GBH Insights.
Disney is looking to buy the bulk of Fox not just for Sky but for Fox's television and movie studios and sports channels. Fox productions and sports rights could help Disney boost its upcoming streaming services to rival Netflix.
Comcast, which is based in Philadelphia, operates cable TV and internet services in the U.S. besides owning TV channels and production studios. An expansion to Europe would let it control both the content and distribution the same way.
Comcast had itself been in talks to buy parts of Fox, so its bid for Sky could be a more direct way to acquire media assets in Europe, analysts say.
Shares in Sky surged 20 percent to 13.26 pounds in London on the prospect of a bidding war. The company's management issued a statement advising shareholders to take no action as Comcast had not yet made a firm offer.
Disney did not respond to a request for comment. Fox said in a statement it remains committed to its offer for Sky.
Laith Khalaf, senior analyst at Hargreaves Lansdown, noted that Sky's value increased after it secured English Premiership football rights at a competitive price at an auction two weeks ago.
He said investors seem to anticipate further developments, including a counterbid from Fox.
"This isn't a done deal yet," he said. "Sky shares are now trading 2 percent above the Comcast offer price, so the market clearly smells the scent of some more action before this saga draws to a close."
Mae Anderson in New York contributed to this report.