A firm opponent of Comcast’s $31 billion bid for U.K. satellite TV operator Sky since the deal was first proposed a month ago, MoffettNathanson analyst Craig Moffett released another investor note today, pondering whether the top U.S. cable operator will abandon its Sky gambit in the same way it dropped a proposed $54 billion bid for Disney back in 2004.
In a note cleverly titled “Comcast: The Rhyme of History,” Moffett recalled the cratering of Comcast stock following announcement of the Disney bid—the market’s reaction diluted Comcast’s value to the point where CEO Brian Roberts conceded that “consummating a transaction would have required us to give up substantially more Comcast shares than we originally proposed.”
To make the headline work, Moffett threw in this Mark Twain quote: “History doesn’t repeat itself: But it often rhymes.”
He then backed up the theses: Comcast’s Sky bid is a prelude of a larger intervention—should AT&T reopen regulatory pathways by beating the Justice Department in court and succeeding in its bid to buy Time Warner Inc., Comcast will in turn seek to counter-bid Disney for a large collection of 21st Century Fox assets.
But the investor reaction to the Sky bid has not been good for Comcast.
Just as it was in 2004, Moffett noted, “investors were frustrated by Comcast’s pursuit of M&A rather than share repurchases. And then, as now, Comcast’s shares had fallen sharply in the wake of their bid.”
Since Comcast made its bid for Sky in February, Moffett added, Comcast shares have sold off by 16.6%
“The sell-off primarily reflects concerns about Comcast’s foray into Europe, and what appears a likely follow-on pursuit of Fox if AT&T’s acquisition of Time Warner survives the DOJ challenge,” he wrote.