Comcast has won out over Fox with a $39 billion offer to buy 61 percent of Sky News. The bidding took the form of a rare, three-round blind auction over the weekend. In the process, Comcast and Fox submitted their bids to a third party arbiter.
Even though the bidding is done, the deal isn’t finalized. The next step is for both Comcast and Fox to submit a formal offer letter to shareholders and Sky News. Sky News shareholders will then choose which offer to accept. A decision must be made by Sky by October 11.
Comcast’s final bid of $39 billion represents a $3.6 billion premium over Fox’s previous bid. Comcast’s higher-than typical competing bid is thought to serve the purpose of swaying shareholders away from their inclination for Fox/Disney, who already own 39 percent of Sky News. Sky’s board has released a statement urging shareholders to accept the offer by Comcast.
“As the price of the final Comcast offer is materially superior, it is in the best interests of all Sky shareholders to accept the Comcast offer,” said the Sky Board in a statement after the blind bidding. “Accordingly, the independent committee unanimously recommends that Sky shareholders accept the Comcast offer, and in order to ensure the successful closing of the Comcast offer, urges shareholders to accept immediately.”
Comcast CEO Brian L. Roberts expects the deal to be completed and finalized in October. If the deal goes through, Comcast is expected to begin buying out Fox’s remaining 39 percent stake, which they recently sold to Disney, either on a market basis or in an additional deal.
Roberts reportedly sees the acquisition as a means of expedited and efficient international expansion for the company. Sky News has over 23 million subscribers across Europe and a substantial presence in the over-the-top streaming space.
Sky News CEO Jeremy Darroch sees the deal as surpassing monetary benefits for Sky as well.
“As part of a broader Comcast, we believe we will be able to continue to grow and strengthen our position as Europe’s leading direct-to-consumer media company,” Darroch stated. “…Sky has never stood still, and with Comcast our momentum will only increase.”
Over-the-top streaming services are seen as a large factor in this deal, with Sky’s exposure to the area. Moreover, a number of analysts feel that Disney’s 60 percent stake in Hulu could come into play as well. If Comcast buys Disney’s Sky News holdings at the same price-per-share as their offer to sky, it’s possible for Disney’s 60 percent holdings of Hulu to enter as part of a larger deal.
Disney has already expressed plans to develop their own streaming platform to capitalize directly on their intellectual property. While the company may choose to maintain its controlling stake in Hulu and offer both streaming services, it’s also highly possible that they may choose to sell the 60 percent to Comcast as the Sky News deal continues to be finalized.
If this occurs, Comcast would then own a 90 percent stake in Hulu. A controlling stake in Hulu would position the company well for competition in the evolving streaming sector.