Comcast’s $39bn Sky win extends its ‘media empire’

Bloomberg

Comcast Corp. won a bidding war for Sky Plc with a $39 billion offer for Europe’s largest satellite broadcaster, staving off rivals 21st Century Fox Inc. and Walt Disney Co. to extend the US cable giant’s empire abroad.
In a rare auction overseen by UK regulators, Comcast bid 10 percent more than Fox on Saturday, all but assuring that investors in London-based Sky will tender their shares to the Philadelphia-based cable carrier. Fox, which is selling its 39 percent stake to Disney as part of a deal struck last year, is considering pledging the Sky shares to Comcast if Disney supports the move, people familiar with the matter said.
Should Comcast complete the transaction, Chief Executive Officer Brian Roberts will lead a global television and internet giant with customers from San Francisco to Berlin, helping contend with the rising threat from Netflix Inc. Roberts will face questions about the price tag from investors who have been nervous about the company’s rising debt levels.
Still, the outcome marks a victory for the 59-year-old cable magnate after a string of M&A setbacks. Roberts, who spent Saturday in a London hotel orchestrating the auction, had previously tried to acquire the bulk of Fox — only to be outbid by Disney.
“This is a great day for Comcast,” he said in a statement. “Sky is a wonderful company with a great platform, tremendous brand and accomplished management team.”
Buying Sky allows Roberts to expand the content and distribution model he has embraced since taking control of NBCUniversal seven years ago. With Sky, Comcast would deliver TV services to 52 million customers in the US as well as European countries such as UK, Italy and Germany, and add sought-after programming such as the rights to Premier League English soccer.
Comcast’s emergence as the winner helps put an end to months of uncertainty over the future ownership of the TV company Rupert Murdoch founded in 1989. Independent directors at Sky have recommended accepting Comcast’s offer, and investors have until Oct. 11 to tender their shares. Comcast doesn’t have any antitrust hurdles to worry about, after clearing European Union approval in June.
While Sky shareholders are celebrating, Comcast’s may feel uneasy. Investors have already expressed concerns about its M&A ambitions this year, sending its shares down more than 5 percent. Comcast’s final bid of 17.28 pounds a share was well above the 15.67 pounds offered by Fox.
It remains unclear whether Disney will embrace the idea of selling Fox’s 39 percent stake in Sky to Comcast. Fox said in a statement on Saturday that it was still “considering its options and will make a further announcement in due course.”
The end of the bidding war is an emotional moment for Murdoch, since the 87-year-old controlling shareholder of Fox had been working for years to acquire the portion of Sky that his company didn’t already own.
An earlier attempt was thwarted in 2011 by a phone-tapping scandal at his UK newspaper business.
Crucially for Comcast, Sky has a growing video-streaming business.