Skip to main content

U.S. cable giant Comcast Corp. scored a big win in the scramble for media assets by beating Rupert Murdoch, and his backer The Walt Disney Co., in the battle for Sky PLC with an eye-watering US$40-billion bid.

It was a “great day” for Comcast, chairman and chief executive Brian L. Roberts said of Saturday’s auction victory. The U.S. group has had its sights set on Sky, Europe’s biggest pay-TV company, ever since Disney beat it to most of Mr. Murdoch’s Twenty-First Century Fox Inc. assets in July.

Some analysts, however, said Comcast’s bid of £17.28 a share in the rare blind auction was driven by an urgent need to build scale to defend against the threat posed by the streaming services of Netflix Inc. and Amazon.com Inc.

“The price being paid for Sky is shocking, but it is a clear sign that legacy-media companies are desperate for scale in a world dominated by tech platform giants,” said Richard Greenfield, technology and media analyst at research firm BTIG LLC.

Explaining the basis of big media’s rush to merge, Mr. Greenfield likened it to the opening scene of the documentary March of the Penguins.

“The penguins huddle to survive winter. With Disney/Fox and Comcast/Sky, it’s penguins huddling. Winter is still coming,” he said, referring to the advance of tech players such as Amazon.

Sky would reduce Comcast’s reliance on its mature U.S. market by opening the door to Europe, where pay-TV penetration is about 30 per cent and rising.

The deal would also transform Comcast into the world’s largest pay-TV operator with 52 million customers and lift the proportion of its non-U.S. revenue to about 20 per cent from about 9 per cent, based on 2017 full-year figures.

Comcast is paying a high price – more than double Sky’s share price before Fox made its approach in December, 2016. But analysts said that a favourable result in the English Premier League soccer rights auction – Sky’s biggest expense – during the takeover saga had made the business more valuable.

Sky also gives Comcast an immediate beachhead in online-video streaming with its Now TV business, which has about 2 million customers.

Analysts see Comcast supercharging Now TV to combat Netflix across the globe. And Sky’s exclusive relationships to distribute HBO entertainment content and Premier League soccer further insulate Comcast over the next few years.

Critics of the deal, however, argue that such relationships are sure to come under threat in the longer term, as content producers launch their own services and competition for sports broadcasting rights intensifies as deep-pocketed tech companies join the fray.

On the upside, however, Sky’s product range – including broadband connections that complement its satellite offer on state-of-the-art platforms such as Sky Q – and its brand make it more than a content aggregator, said Alice Enders, head of research at Enders Analysis,

“Sky has an extraordinarily well-established brand. It is a destination, and that is very valuable in the world of fragmented media,” she said.

Report an editorial error

Report a technical issue

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 26/03/24 6:40pm EDT.

SymbolName% changeLast
CCZ-N
Comcast Corp
+0.46%56.2

Interact with The Globe