Comcast has thrown its hat in the ring with a $31 billion bid for U.K. broadcaster Sky, but the question now is whether that hat is actually a wrench for Disney and 21st Century Fox?
Analysts have speculated on what Comcast’s next big move could be for the past year. As video growth slows, the media company is in need of an acquisition to give to it some juice and Sky is an attractive asset because of its 23 million subscriber-foothold in Europe.
During Comcast’s quarterly conference call with investors in February, CEO Brian Roberts said that Comcast has “admired Sky for a long time.”
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Disney CEO Bob Iger has also been eyeing Sky, even calling the company a crown jewel. Fox owns 39 percent of Sky, which is an important part of Disney’s $52.4 billion bid for some of Fox’s assets.
“Based on my perception of how Disney views this asset, I don’t think they’ll just walk away,” CFRA Research analyst Tuna Amobi told TheWrap. “I think they’re likely to counter bid, which will probably lead to a bidding war.”
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Disney has previously indicated that they could even make a separate offer for Sky aside from its pending Fox deal, Amobi said. The company could pursue that, or even go back and renegotiate its deal with Fox.
A Fox insider told TheWrap that the deal with Disney isn’t contingent on the Sky outcome. “We can do the current deal with current 39 percent — or 100 percent,” they said.
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Comcast has been linked with Disney, Fox and Sky since Disney announced its bid for Fox’s assets in December. At the time, BTIG analyst Rich Greenfield posited that Comcast was a more logical buyer considering its position.
“Comcast could pay significantly more for Fox’s to-be-sold assets than Disney,” Greenfield said. “With Sky as the largest asset being sold by Fox, the synergies with Comcast are significant. The two companies could leverage their set-top box technology, buy original and library content for a wider subscriber base and reach more global deals with third-parties who want to be on their set-top platform (such as a Netflix or Amazon) whereas Disney has no pay TV business in the US to leverage off, nor any experience operating a pay TV business.”
Eric Schiffer, CEO of The Patriarch Organization and chairman of Reputation Management Consultants, told TheWrap that if Comcast could buy Fox, it would have. “But that would be like watching cobras circle each other. Murdoch would rather chew glass than sell to Comcast,” he said.
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Comcast’s bid for 100 percent of Sky values the company significantly higher than Fox’s offer for the 61 percent of the company it doesn’t own.
The ball is in now Disney’s court, but how this shakes out also depends on the regulatory perception in the U.K.
“We’ll have to wait to see what happens,” Amobi said about the battle for Sky. “It’s shaping up to be a highly contested scenario.”
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