Comcast Sky Takeover – Volatility Ahead

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Comcast Sky Takeover – Volatility Ahead?

Shareholders in media broadcasting company Sky will be rubbing their hands with glee as the price of Sky shares has doubled in the past year. The American cable operator Comcast won the auction sale for Sky on 22 September, with shareholders achieving a valuation of £17.83 per share.

Sky Takeover Numbers

The Comcast purchase of Sky places a value of over £30bn on the company, in this blind auction process which was overseen by the UK’s Takeover Panel. The Comcast Chairman and Chief Executive commented that it was “a great day for Comcast“.

Sky recommended shareholders accept the bid as it “represents materially superior value“.

In the UK, Sky has 23mn subscribers and its rights to show Premier League football mean that it’s one of the most profitable TV companies in Europe.

Fox Bid

Comcast’s rival in the auction was 21st Century Fox, which bid £15.67 per share. Fox already owns 39% of Sky and it seemed on the cards they would succeed in their bid.

A number of regulatory concerns and issues have been raised as a result of the sale of Sky and the influence Fox owner, Rupert Murdoch, already has on the UK’s media.

However, Brian Roberts, the Chairman and Chief Executive of Comcast, stated:

Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team. 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 2020.”

Comcast Global Reach

Comcast already owns NBC Universal and is the largest provider of cable in the United States. Following the takeover of Sky, the company will be the largest provider of pay TV in the world, with approximately 52mn customers globally.

Chief Executive of Sky, Jeremy Darroch, commented:

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This is the beginning of the next exciting chapter for Sky. Brian and his team have built a great business and we are looking forward to bringing our two companies together for the benefit of our customers and colleagues. As part of a broader Comcast we believe we will be able to continue to grow and strengthen our position as Europe’s leading direct to consumer media company“.

Choppy Water Ahead?

While the deal seems done and dusted at this stage, with so many twists and turns already, it is unlikely that the next 12 months will be straight forward for Sky. Any potential regulatory investigation, or shareholder revolt, could see sudden volatility impact the current valuation. There may still be further trading opportunities yet.

As Britain Gives Go Ahead, Fox-Comcast’s Takeover Battle For Sky Intensifies

Fox is seeking to buy the stake for 11.4 billion pounds but the long-running saga has been plagued by fears over media plurality and broadcasting standards — and the influence of Australian-born US citizen Rupert Murdoch.

Comcast’s cash offer values each Sky share at 12.50 pounds, which is higher than Fox’s

London: Britain on Tuesday opened the way for a bidding war between US cable giant Comcast and Rupert Murdoch’s 21st Century Fox over pan-European TV group Sky, but warned that Fox would have to sell off Sky News to address concerns about media plurality.

Culture Secretary Matt Hancock announced that he has cleared Comcast’s 22-billion pounds ($29.4-billion, 25.1-billion-euro) bid for all of Sky, which is best known for its live coverage of English Premier League football.

“I have concluded that the proposed merger does not raise public interest concerns and so I can confirm today that I will not be issuing an intervention notice,” he told parliament.

Turning to Fox’s lower offer for the 61 percent of Sky it does not already own, Hancock said he favoured “divesting Sky News” to a suitable third party to address public interest concerns identified by regulators, before giving it the nod.

Fox is seeking to buy the stake for 11.4 billion pounds but the long-running saga has been plagued by fears over media plurality and broadcasting standards — and the influence of Australian-born US citizen Murdoch.

Murdoch owns major British newspaper titles The Times and The Sun and critics say obtaining full control of Sky News would give him too much influence in the news business.

Bidding war on horizon’

The deputy leader of the main opposition Labour party, Tom Watson — a vocal critic of Murdoch — urged Hancock to “protect the interests of the public”.

He said: “With Comcast now in the ring, the future for Sky is uncertain. A bidding war is on the horizon.”

New York-listed Fox had already proposed in April to sell rolling TV news channel Sky News to Disney to clinch its takeover of Sky.

Comcast, which itself had lost out to Disney last year in an effort to buy 21st Century Fox, had last month formalised its Sky cash bid.

Hancock made his announcement in light of a final report from Britain’s Competition and Markets Authority (CMA).

The regulator again raised the possibility of “increased influence of the Murdoch Family Trust over public opinion and the UK’s political agenda” should Fox win control of Sky News.

“The CMA concluded in line with its interim findings that the merger may not be expected to operate against the public interest on the grounds of a genuine commitment to broadcasting standards,” Hancock said.

However he added: “I agree with the CMA that divesting Sky News to Disney, as proposed by Fox, or to an alternative suitable buyer, with an agreement to ensure it is funded for at least ten years, is likely to be the most proportionate and effective remedy for the public interest concerns that have been identified.”

In a statement, Disney said: “We welcome today’s announcement from the secretary of state and are ready to engage in any discussions requested by the secretary of state.”

Consultation period

There will now be a 15-day consultation period to finalise details of the Sky News divestment before Hancock reaches his final decision on the Fox deal.

However, he also warned that — should a Sky News sale not be attainable — then his “only effective remedy would be to block the merger altogether”.

Earlier this year, the CMA had provisionally ruled that Murdoch’s planned takeover was not in the public interest on media plurality concerns.

Comcast’s cash offer values each Sky share at 12.50 pounds, which is significantly higher than Fox’s offer of 10.75 pounds.

Back in 2020, Murdoch failed to buy the British pay-TV group, then known as BSkyB, owing to a phone-hacking scandal at his now-defunct News of the World tabloid newspaper.

Comcast’s $40-billion deal for Sky is all about Netflix (NFLX, CMSA, FOXA, DIS, BSY)

Ethan Miller/Getty Images

  • Comcast’s $40-billion deal for Sky will allow it to expand its global reach.
  • The deal strengthens its content offerings to take on Netflix and Amazon.
  • The fate of Hulu and Fox’s stake in Sky may now be set for possible asset swaps, analysts say.
  • Watch Comcast, 21st Century Fox, Walt Disney and Sky trade in real time.

Comcast’s $40-billion acquisition of the European broadcaster Sky will strengthen its global footprint in content creation to take on Netflix and Amazon. The US cable giant, which owns NBC Universal, has had its eye on Sky ever since it dropped out on the $71 billion bidding war for 21st Century Fox assets in July.

After beating out the Disney-backed Rupert Murdoch’s 21st Century Fox to acquire Sky’s assets, Brian Roberts, Comcast’s chairman and chief executive, said, “This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally.”

With the takeover of Sky, Comcast immediately gets access to 23 million customers in seven countries, 2 million customers on its streaming service called Now TV, and broadcasting rights to premier sporting properties like English Premier League games and Formula One. This will allow Comcast to compete against Netflix and Amazon by investing in original programming and scaling up distribution channels in new markets.

Due to the rise of streaming giants and a large number of households dropping cable-TV subscriptions in favor of the former, media companies have been struggling to figure out alternate revenue streams to the mature American TV market. In an effort to solve their problems, they have launched streaming services, acquired companies, and expanded overseas. They have even sold themselves to wireless companies like Time Warner did with AT&T.

According to a UBS note sent to clients on Monday, Comcast’s subscriber base will climb to 53 million from 30 million as a result of the Sky deal, while its international reach jumps to 25% from 8%. The deal will also help Comcast develop its direct-to-consumer strategy by giving it “greater scale to amortize its content investments,” the analysts said.

But the battle between the cable giants is not yet over. Analysts now see the limelight shifting to Hulu, and Disney-Fox’s stake in Sky . Currently, Comcast, Fox, and Disney each have a 30% stake in the streaming service. Now, with its acquisition of Sky, Comcast owns 61% of the European pay-TV giant while Disney and Fox own the remaining 39%.

And based on the Comcast offer, UBS analyst John Hodulik values the Disney/Fox stake in Sky at about $15.5 billion and Comcast’s stake in Hulu at $3 billion.

” We believe it also sets the stage for possible asset swaps,” he said. ” With Disney/FOX potentially selling its Sky stake ( worth

$15.5B based on Comcast’s offer) and Comcast perhaps selling its 30% stake in Hulu ( UBSe $3B).”

Comcast shares were down 7% Monday. Shares of Disney were up by 2% and Fox shares climbed 1.1.% while Sky surged by 8.9%.

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