Yahoo Finance Comcast turns focus to Sky after exiting battle for 21st Century Fox
Comcast has pulled out of its pursuit of 21st Century Fox, turning its focus to trumping Rupert Murdoch’s attempt to take full control of Sky.
The US media and cable company’s decision to end its battle with Disney will make Murdoch’s long-held ambition of buying the 61% of Sky he does not already own a more difficult task.
Last week, in a day of bid and counterbid, Comcast tabled a £26bn offer to buy Sky, trumping Murdoch within hours of the media mogul making a new £24.5bn offer. Sky’s independent committee has recommended that shareholders accept Comcast’s offer.
“Comcast does not intend to pursue further the acquisition of the 21st Century Fox assets and, instead, will focus on our recommended offer for Sky,” said Brian Roberts, chairman and chief executive of Comcast.
Sky’s share price fell 2% following Comcast’s news, indicating investor fears that Murdoch might not now return with an improved bid.
Under the deal that Fox has with Disney, Murdoch must gain consent to raise his bid. With Comcast out of the Fox hunt, it is not clear if Disney will decide it needs to also own the 61% of Sky not already owned by Murdoch’s company. Fox owns the other 39% of Sky.
While both Fox and Sky have huge strategic value to Comcast, analysts had speculated that Sky’s 23 million pay-TV customers across Europe would prove to be the bigger draw.
For Comcast, a Sky deal would make it the world’s largest pay-TV operator – it is already the biggest in the US – and at a stroke reduce its almost total dependence on the US for revenues. Owning Sky would result in Comcast’s non-US revenues rising from 9% to 25% of its total.
If Comcast is successful in taking over at least 51% of Sky the company has said that it could live with the Murdochs or Disney as minority shareholders, but it hopes to engineer a full takeover. It is unlikely either company would remain a minority shareholder in the event Comcast succeeds.
Comcast had also been involved in a bidding war against Disney for Fox, last month tabling a hostile all-cash $65bn bid that topped Disney’s first offer.
Disney subsequently sweetened its offer to $71.3bn and recently gained regulatory approval in the US, with Fox shareholders due to vote on the deal on 27 July.
Given the timescale, analysts had concluded that Comcast realistically had until the end of this week to come back with a new Fox offer to top Disney.
The US department of justice’s decision to appeal against a court ruling on its attempt to stop AT&T’s acquisition of Time Warner cast doubt on whether Comcast would be able to gain approval for any deal for Fox.
“I’d like to congratulate Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company,” said Roberts.
Under UK takeover rules, Murdoch has until 8 August to submit a new bid for Sky. The agreement between the two companies states that Murdoch pays up to £13 a share, Disney for each £1 a share above that. The deal Murdoch tabled last week valued Sky at £14 a share.
