NBC Universal owner Comcast offered $31 billion (£22 billion) for ownership of TV company Sky in late February following a bid from Rupert Murdoch’s 21st Century Fox.
The Comcast offer comes after Fox’s own bid from December 2016 for the 61% of Sky that they do not already own. The Comcast bid is, however, 16% higher than the Fox bid. This high offer has caused shares of Comcast, 21st Century Fox and Disney to fall in trading (the latter due to the Fox-Disney shares). Comcast shares fell by 7.4%, Disney shares by 4.5% and Fox by 3.3%, while the news caused Sky shares to increase.
Both companies, Fox and Comcast, are seeking Sky because of its notable status as a TV company with 23 million customers, leading positions within the UK, Italy, and Germany, and its use of technology innovation to increase the viewers’ experience. Disney’s chief executive, Bob Iger, called Sky the “crown jewel(s)” of Fox.
Comcast hope to increase their international revenues by 16% by gaining part ownership of Sky
Comcast is the largest cable operator in the US, with 1,300 UK employees which includes the production company for Downton Abbey. The company owns US cable business, Xfinity, which had revenues of $84.5 billion last year and has approximately 25 million high-speed internet customers. Comcast hopes to increase its international revenues by 16% by gaining part ownership of Sky.
“Comcast intends to use Sky as a platform for growth in Europe. We already have a strong presence in London through our NBC Universal international operations, and we intend to maintain Sky’s UK headquarters,” the company’s chairman, Brian Roberts, said.
Comcast wishes to increase Sky’s spending on original shows such as the likes of Riviera and Fortitude, a move that would most likely go down well with viewers.
Fox had agreed to sell a big part of its operations to Disney, including the 39% stake in Sky. This means that Disney would have effected a full takeover of Sky if Fox is granted their takeover. If Fox wishes to counter Comcast’s offer, it may need approval from Disney. However, Disney could also make a direct offer to Sky shareholders.
Analysts Ian Whittaker and Annick Maas of the investment bank Liberum, believe that Comcast will triumph since Fox agreeing to sell to Disney indicates that they want to let Sky go, according to CNN. It is also doubtful whether Fox will engage in a bidding war, which could be true following Fox’s statement response to Comcast’s competing offer:
“21st Century Fox notes the possible offer announcement made by Comcast Corporation (Comcast) for Sky plc (Sky). 21st Century Fox remains committed to its recommended cash offer for Sky announced on 15th December 2016.”
The Fox bid raises worries on media plurality as a Fox triumph would mean that the Murdoch family would have too much control over UK news media. The Murdochs control Fox and News Corp, which is a publisher of the Sun and the Times, so full ownership over Sky would also mean full control of Sky News.
Rupert Murdoch has offered to strengthen Sky News’ independence and fund it for ten years in order to receive approval for a takeover. Meanwhile, Fox has also proposed certain measures to reduce fears of the Murdoch family’s influence over UK media.
Roberts (Comcast) have said that they are prepared to co-own Sky with Disney, but only if they have the majority stake, so who will get ownership is still unclear. Approval of the takeover is expected to come in June.