Comcast set to derail Murdoch ambitions with £22BN bid for Sky | Major Businesses | Business
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comcast 27feb2018Just as the UK TV market was getting ready for 21st Century Fox to make its final push to achieve Rupert Murdoch’s long-standing aim of full control of the Sky pay-TV group, US cable giant Comcast is now poised to crash the deal.

In a move that has taken the UK industry by total surprise, Comcast has lodged a cash proposal of £12.50 per Sky share for which it says represents a 16% increase in value over the existing 21st Century Fox offer. This implies an equity value of $31 billion (£22 billion) for Sky.

The acquisition is designed to enhance the entertainment, distribution and technology leadership of Comcast, and importantly expand its international footprint to more effectively compete in what it says is a rapidly changing and intensely competitive entertainment and communications landscape. Comcast believes that adding Sky to the company’s fold would increase its international revenues from 9% to 25% of total company revenues as well as creating ‘compelling’ opportunities for growth and innovation. Comcast already has a presence in London through its NBCUniversal international operations, and would maintain Sky’s UK headquarters.

“We think Sky is an outstanding company. It has ... leading positions in the UK, Italy and Germany,” declared Comcast chairman and CEO Brian Roberts after making the bid. “Sky has been a consistent innovator in its use of technology to deliver a fantastic viewing experience and has a proud record of investment in news and programming. It has great people and a very strong and capable management team.”

Active in the UK, Ireland, Germany, Austria, Italy, Spain and Switzerland, Sky currently serves 23 million customers in seven countries with TV and mobile communications services, and racked up $18.5 billion in 2017. As well as having exclusive partnerships in Europe with HBO, Showtime and Warner Bros, and original content creation through its Sky Original Productions programme, Sky also has been the long-time owner of key sporting rights in the region, most notably that of English Premier League football. Indeed, on 14 February, it agreed to pay £1.193 billion per year to capture the main tranche of rights to Premier League football for the three seasons from 2019/20

All of which has made the company hugely attractive to the Murdoch organisation, which has owned a 39.1% stake in the firm, and the object of a number of outright ownership bids which have fallen foul of UK regulatory hurdles. On 23 January the UK Competition and Markets Authority (CMA) provisionally found that Fox taking full control of Sky was not in the public interest due to media plurality concerns. In its latest move to get a full ownership big across the line and address plurality concerns 21st Century Fox was reportedly due to offer to guarantee funding for ten years of its Sky News outlet. Comcast is confident that it will not face such regulatory concerns.

If Comcast is successful it is not clear where this would leave Walt Disney Company’s $52.4 billion bid to buy select 21st Century Fox TV and film assets which at the time in December 2017 included the 39% stake in satellite broadcaster Sky.