Comcast outbids Fox with £30b offer for Sky in auction

Buying Sky will make Philadephia-based Comcast the world’s largest pay-TV operator with around 52 million customers.
Buying Sky will make Philadephia-based Comcast the world’s largest pay-TV operator with around 52 million customers.PHOTO: AFP

LONDON (REUTERS) - Comcast beat Rupert Murdoch's Twenty-First Century Fox in the battle for Sky on Saturday (Sept 22) after offering £30.6 billion (S$54 billion) in a dramatic auction to decide the fate of the pay-television group.

The US cable giant bid £17.28 a share for control of London-listed Sky, bettering a £15.67-a-share offer by Fox, Britain's Takeover Panel said.

Buying Sky will make Philadephia-based Comcast, which owns the NBC network and Universal Pictures, the world's largest pay-TV operator with around 52 million customers.

Chairman and chief executive Brian Roberts has had his eye on Sky as a way to help counter declines in subscribers for traditional cable TV in its core US market as viewers switch to video-on-demand services like Netflix and Amazon .

"This is a great day for Comcast," he said. "This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally."

Comcast's knock-out offer thwarted Murdoch's long-held ambition to win control of Sky, and is also a setback for US entertainment giant Walt Disney which would have likely been its ultimate owner.

Disney agreed a separate US$71 billion (S$96 billion) deal to buy most of Fox's film and TV assets, including its existing 39 per cent stake in Sky, in June and would have taken full ownership after a successful Fox takeover.

Comcast's final offer was significantly higher than its bid going into the auction of £14.75, and compares with Sky's closing price of £15.85 on Friday.

Comcast believed it needed to deliver a knock-out blow given that Fox's existing stake in Sky gave it a chance of victory if it was a close second to Comcast, two sources said.

Comcast's final offer - more than double Sky's share price before Fox made its approach in December 2016 - quickly won the backing of Sky's independent directors on Saturday.

"We are recommending it as it represents materially superior value," said Martin Gilbert, chairman of Sky's independent committee. "We are focused on drawing this process to a successful and swift close and therefore urge shareholders to accept the recommended Comcast offer."

Fox will now concede defeat, a source told Reuters.

It is reviewing options for its stake, a holding that stems from Murdoch's role in the creation of the company nearly three decades ago, the source said.

Fox declined to comment.

Comcast, which requires 50 per cent plus one share of Sky's equity to win control, said it was also seeking to buy Sky shares in the market.


One hedge fund manager who holds Sky shares said nobody could complain about the Comcast price.

"The question now is if Fox actually sells out and if not can Comcast get to 50 percent," he said.

Another hedge-fund manager said it was a "huge" price, and shareholders would accept it.

Sources familiar with the matter said Fox, Disney and Comcast had not been in discussions about the 39 per cent stake.

The quick-fire auction marked a dramatic climax to a protracted transatlantic bidding battle waged since February, when Comcast gate-crashed Fox's takeover of Sky.

It is a blow to 87-year-old Murdoch and the US media and entertainment group that he controls, which had been trying to take full ownership of Sky since December 2016.

Murdoch's son James, currently chairman of Sky, was instrumental in building the company into the leading European pay TV group, with operations in Britain, Ireland, Germany, Austria and Italy, and more than 23 million customers attracted to its top-flight sport and entertainment content.

Sky's chief executive Jeremy Darroch said it was the beginning of a new chapter.

"Sky has never stood still, and with Comcast our momentum will only increase," he said.