Comcast have increased their offer to £12.50 per Sky share, beating Murdoch’s Fox bid by almost 16% for the European broadcaster. This move complicates the deal to sell Fox (which was priced assuming the Sky deal would conclude) to Disney for $52.4 billion of Disney stock.
The Sky bid from Fox was already complicated due to UK impartiality rules over Fox owning too much of the UK news media through its myriad of newspapers, and the flagship Sky News channel. Assuming it clears UK regulators, you are looking at a straight cash versus cash offer between Comcast and Fox – but who wants it more ?
At present Disney appear to be losing the battle for Sky.
Will Disney try to tempt Comcast to drop interest by dangling a carrot in the form of Hulu? The streaming network may be irrelevant to the House of Mouse with the upcoming Disney streaming platforms coming in 2019, but could be very attractive to Comcast.
Comcast has already said that it has identified $300 million of annual cost savings with a further $200 million saved by combining Sky’s TV output with that of Comcast’s own NBC / Universal library. This would see them achieve a return on investment after of tax of 7.5%, higher than Comcast’s current cost of capital. Making the deal great business sense for Comcast.
Disney can’t generate those kind of savings as their business models do not overlap in the same way with Sky, it will come down to less a business decision on paper and more to do with if Disney CEO Bob Iger sees Sky as central to Disney’s European expansion ambitions.
Fox Chairman Rupert Murdoch himself may not wish to give up access to Sky to Comcast, and may seek to hold on to his shareholdings in the company, even if that means stripping it out of the Disney deal.
Whatever way the deal moves, news of the Comcast bid sent Sky shares soaring to £13.57 on a belief that Disney may throw common sense to the wind, and push to close the deal for Sky with a renewed higher bid around the £13.50 mark.
With Sky being the network carrying much of the Star Wars and Marvel programming across Europe, this is a complicated myriad of deals that will determine a lot about the future of Star Wars on European TV.
