With a surprise $31 billion bid for Sky, US cable giant Comcast has just sparked what experts believe will be a bidding war even as 21st Century Fox makes its final push for full control of the UK-based pay TV group.
What took the industry by surprise is the manner in which Comcast “hit the ground running” by lodging a cash proposal of £12.50 per Sky share, which 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.
Comcast CEO Brian Roberts is quoted as saying that the UK-based pay TV broadcaster would be valuable as the US cable giant looks to expand internationally. Media reports have indicated that Roberts has favoured Sky-based technology including the Sky Q Box and that he was committed to preserving Sky News.
In the meantime, the industry is speculating on whether Fox will come back with a higher offer for Sky. There has been a lot of speculation from the industry indicating the complications going back to Disney’s $52.4 billion, all-stock deal in December 2017, to acquire 20th Century Fox and other entertainment and sports assets from Rupert Murdoch’s empire. The belief in the industry is that if the Murdochs make a higher bid for Sky and are not helped by Disney, it would eat into the sale of Fox assets to Disney.
Experts believe that once Fox’s bid for Sky has been cleared by the UK regulators, the CMA (The Competition and Markets Authority), Fox might make a bigger offer for Sky with Disney’s help and that will set off a bidding war.
The CMA has laid out a roadmap for the Fox bid including safeguarding the independence of Sky News. Rupert Murdoch’s Fox is hoping the creation of an independent editorial board to protect the news channel will satisfy regulators and allow it to finally take control of the European pay TV group.
Experts have also lauded the Comcast move saying it is bold and aggressive with potential to transform them into a significant player in the international field. Industry watchers believe there are synergies between Sky’s pan-European assets as Comcast looks to expand internationally.The move also indicates that the media and broadcast landscape has moved away from being US-centric and it is not enough to have a huge share in the US market alone.
Currently it is unclear, if this gambit by Comcast is to get Fox back to the negotiating table to get them to discuss the Fox’s entertainment assets that have been offered to Disney. Murdoch spurned Comcast’s initial offer, which is believed to have been 15% higher than Disney’s, because he saw Disney as a better strategic fit from a regulatory perspective.