Comcast confirms $31bn Sky offer

NBCUniversal owner Comcast has made a formal approach to buy European pay TV operator Sky for £22.1bn (US$31bn), challenging an existing offer from Rupert Murdoch’s 21st Century Fox.

Brian Roberts

The US cable giant said it had offered £12.50 per Sky share, a 16% premium on that of the existing £10.75 offer from Fox, confirming an approach that first emerged in February.

Comcast’s bid is expected to generate “synergy savings” of around US$500m and would come with an undertaking to protect the independence of the UK-based pay TV operator’s Sky News channel for a decade.

Further, the US company said it would promise not to acquire a majority stake in any UK newspapers, one of the major concerns of Murdoch-backed Fox’s proposed takeover of Sky, which has been in the works for more than a year but has faltered after regulatory concerns.

Comcast CEO Brian Roberts said he had “long believed Sky is an outstanding company and a great fit” with his own firm.

“Sky has a strong business, excellent customer loyalty and a valued brand. It is led by a terrific management team who we look forward to working with to build and grow this business.”

Roberts said the deal would provide a “combined customer base of approximately 52 million,” which would enable the company to invest more in original and acquired programming.

The offer comes over a year after Fox made its initial bid to take control of the 61% of Sky that it doesn’t already own in a £11.7bn deal, which has faltered, however, after UK regulator the Competition and Markets Authority found it was not in the public interest, citing concerns over media plurality.

In response to the latest development, Fox said today it “notes the announcement made by Comcast Corp of a firm intention to make an offer for the entire issued and to be issued share capital of Sky.”

The company said it “remains committed to its recommended cash offer for Sky announced on December 15, 2016 and is currently considering its options.”

Meanwhile, Sky issued its own statement saying its board was withdrawing its formal support for the Fox offer in light of the higher Comcast bid, and is now “terminating the co-operation agreement entered into with 21st Century Fox.”

Comcast’s formal entry to acquire Sky comes at a particularly tricky time for Fox, which is in the midst of selling off a large swathe of its operations to Disney. Sky was expected to have become part of the Mouse House if the former deal goes ahead.

That undertaking was anticipated to ameliorate any concerns over plurality, although the Fox-Disney deal remains under the scrutiny of US regulators.

Comcast’s offer includes commitments to retaining the independence of Sky News and a pledge not to acquire any major interest in a UK newspaper for the next five years.

Sky said these assurances “should comprehensively address any potential public interest concerns.” In ending its co-operation with Fox, the satcaster also said certain provisions of the agreement would also “cease to apply, including the obligation on 21st Century Fox to pay a break fee of £200m.”

Comcast’s interests range from US broadcast network NBC, Hollywood studio Universal Pictures and DreamWorks Animation. It also operates a swathe of US-focused cable operations and is behind numerous global producers, including Downton Abbey producer Carnival Films and NBCUniversal International Studios.