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Comcast tries to outbid Fox for Sky with $31B offer

By Daniel Frankel Feb 27, 2018 9:55am

Comcast today announced an unsolicited $31 billion bid to purchase U.K.-based European broadcast group Sky, disrupting an earlier $25.8 billion bid by 21st Century Fox and its impresario, Rupert Murdoch, to buy the remaining 61% of the company they don’t currently own.

“We think Sky is an outstanding company,” said Comcast CEO Brian Roberts, in a statement. “It has 23 million customers and leading positions in the U.K., Italy and Germany. 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.

“We intend to maintain and enhance Sky's business. Adding Sky to the Comcast family of businesses will increase our international revenues from 9% to 25%,” Roberts added. “We believe that there are significant opportunities for growth by combining these businesses.”

In the U.K., the Competition and Markets Authority has expressed concern that the Murdoch Family Trust will seek to influence culture and political opinion in Europe with assets like Sky News, much in the same way it does in the U.S. with Fox News. The regulator had suggested spinning off Sky News and insulating it from Murdoch’s influence might be one potential remedy.

However, following Disney’s $52.4 billion bid to buy a large portion of 21st Century Fox assets, it was assumed Fox’s reduced market power in Europe might ease regulatory concerns regarding any Sky deal.

For his part, Roberts insisted that Comcast would do nothing to influence Sky News’ content.

A Sky purchase would transform the largely U.S.-centric Comcast into a truly international company. In fact, Comcast’s lack of assets in the European region is an asset as far as regulatory approval is concerned.

"While Comcast does own a substantial international operation in the U.K. [through NBCUniversal], with more than 1,300 employees, the company has only a minimal presence in the U.K. media market. Comcast therefore does not believe that this Superior Cash Proposal should create any media plurality concerns in the U.K.," Roberts added.

MoffettNathan analyst Craig Moffett called the bid a mix of good and bad news for share holders.

"Unfortunately, the bad outweighs the good," he said.

The good is that Comcast would get additional distribution for NBCU content in Europe, and some European content to distribute in the U.S.," Moffett added. "The bad is that the underlying technology here is satellite, and Comcast will have to twist themselves into knots to explain why satellite distribution won't be just as obsolete in Europe as it already is in the U.S."

mergers service providers 21st Century Fox Comcast Disney