Comcast Corp. bid highest in a quick-fire auction of Sky Plc, dealing Rupert Murdoch’s 21st Century Fox Inc. a knockout blow in their battle for Europe’s largest satellite broadcaster.
The U.S. cable giant offered 17.28 pounds a share, valuing London-based Sky at 29.7 billion pounds ($39 billion), according to a statement Saturday from the U.K. Takeover Panel. A victory over Fox, which bid 15.67 pounds, won’t be sealed until Sky investors tender their shares by an Oct. 11 deadline.
Comcast Chief Executive Officer Brian Roberts is now set to turn his company into a global TV power after conceding ownership of most of Fox’s entertainment assets in a separate bidding war to his rival, Walt Disney Co.’s Bob Iger. Diversifying beyond the U.S. will help him gain scale to compete with the international video streaming giant Netflix Inc.
“I’m pretty excited. We’ve got a good price for it,” said Crispin Odey, founder of Odey Asset Management. The fund manager owns 0.6 percent of Sky shares, according to data compiled by Bloomberg. “I still think it may look a bit cheap in a couple of years.”
Comcast expects to complete the Sky acquisition before the end of October.
“This is a great day for Comcast,” Roberts said in a statement. “Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team.”
A representative for Fox declined to comment.
Buying Sky allows Roberts to expand the content and distribution model he has embraced since buying NBCUniversal seven years ago. With Sky, the Philadelphia-based company would deliver TV services to 52 million customers in the U.S. as well as European countries including U.K., Italy and Germany.
Sky also brings Comcast sought-after TV content, including rights to Premier League English soccer. It has been boosting its investment in original TV productions such as 1920s sex-and-crime saga “Babylon Berlin” and “Britannia,” a period drama about the Roman conquest of Britain.
Netflix has relied on other companies’ broadband networks to distribute its lavish in-house productions and expand its global subscriber base to 130 million, and its rivals are still looking for an effective response.
Crucially for Comcast, Sky has a growing video-streaming business. Roberts has said he was “terribly impressed” with Sky’s market-leading Q box platform, which is also a rich source of data on customer viewing behavior. Comcast estimates that owning Sky will create $500 million in synergies, partly through selling Sky content in the U.S. and NBC programming in Europe.
Fourth Time Lucky?
Adding Sky would mean Comcast generates a fourth of its sales outside of the U.S., up from 9 percent now. It would also represent a victory in Comcast’s chequered history of dealmaking. While Comcast acquired NBCUniversal and DreamWorks Animation over the past decade, it failed in attempts to buy Disney in 2004, Time Warner Cable Inc. in 2015 and Fox in July.
Disney’s $71 billion deal for Fox brought it franchises such as the “X-Men” and hit shows like “The Simpsons.” The loss of Sky partly stymies Iger’s goal of establishing more direct ties to consumers and expanding his international business.
Fox forced Roberts’ hand by raising its bid during the auction under Iger’s direction. That may have been an astute move by Iger, with Fox’s 39 percent stake in Sky now worth much more.
The payout for Murdoch’s Fox would amount to 11.6 billion pounds if it tenders to Comcast, some consolation for his second failed attempt to grab the rest of the U.K. broadcaster. The first was thwarted in 2011 by a phone-tapping scandal at his U.K. newspaper business.
Even if Fox had won the battle for Sky, Murdoch, 87, was poised to sell the business to Disney along with most of Fox’s other assets next year.
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