All Change as Comcast Win UK Bidding War with FOX for Sky UPDATE

After a long battle Comcast has today beaten off Rupert Murdoch’s 21st Century Fox and emerged as the victor in their bidding war for control of Sky (Sky Broadband). The US cable giant raised their final bid to £30bn for the pan-European TV and broadband company (£17.28 per share), while Fox offered £15.67 per share.

Hopefully by now everybody already knows the turbulent history of Murdoch’s repeated attempts to gain full control of Sky, which over the years has faced more than a few regulatory hurdles (here and here). By comparison Comcast, which specialises in cable (DOCSIS) and fibre optic (FTTP) broadband delivery in the USA, doesn’t have the same conflicting media or news interests to worry about.

Arguably Comcast’s win may have actually been secured a few months ago after the company retreated from its strategic counter-pursuit of Fox (here), which at the time was in the process of being purchased by Disney. The market predicted that Comcast’s decision could be taken as a signal that Fox would stop trying to outbid the cable operator and thus enable them to secure Sky, while Disney would in-turn secure Fox.

The development comes at an interesting time for Sky, which until recently appeared to be stuck in a state of limbo over their future plans within the United Kingdom’s broadband market. All this changed a couple of weeks ago when the company finally confirmed that they’d work alongside Openreach (BT) to launch a new set of G.fast and FTTP based ultrafast broadband packages for residential consumers (here).

Comcast are traditionally more broadband focused and as such it will be interesting to see how today’s news evolves Sky’s position in the UK market, as well as across their other territories within Europe (Ireland, Germany, Austria, Italy, Spain and Switzerland). Many of Sky’s rivals are now building their own “full fibre” (FTTP/H) networks and, despite the new Openreach agreement, there’s still plenty of room for Comcast to adopt a similar strategy.

Lest we forget that Sky Broadband is the second largest consumer ISP in the UK after BT, which is a position that Comcast won’t wish to sacrifice. Admittedly there’s still the usual regulatory hurdles and shareholder approvals to get out of the way before Comcast can formally seal the deal, although for now Comcast appears almost certain to take the reins.

UPDATE 24th September 2018 – 7am:

The news came in a little late on Saturday for us get a response from either side, although Comcast’s Chairman has now issued the following statement.

CEO Brian L. Roberts, Comcast’s Chairman, said:

“This is a great day for Comcast. Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team. This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally.

We couldn’t be more excited by the opportunities in front of us. We now encourage Sky shareholders to accept our offer, which we look forward to completing before the end of October 2018.”

Martin Gilbert, Chairman of the Independent Committee of Sky, said:

“We consider the Comcast Offer to be an excellent outcome for Sky shareholders, and we are recommending it as it represents materially superior value. We are focused on drawing this process to a successful and swift close and therefore urge shareholders to accept the recommended Comcast Offer.

On behalf of the Independent Committee of Sky, I wish to thank Jeremy and Andrew for their outstanding leadership of the business throughout the twenty-one month bid process and congratulate everyone at Sky on creating such a successful company that has attracted strategic interest from one of the world’s greatest media companies.”

At this point it might also be worth highlighting Comcast’s formal offer document (PDF), which details their view of the Sky acquisition. Meanwhile Sky has also published a formal response document for the final bid (here).