Comcast has triumphed in the intense battle to acquire Sky – beating U.S. rival 21st Century Fox to the ‘crown jewels’ of European pay-TV. This comes seven months after the NBC Universal owner swooped in to usurp Rupert Murdoch’s company.
The Hollywood studio paid $40 billion for Sky, a move that saw Comcast CEO Brian Roberts finally outmaneuver Disney boss Bob Iger, who was backing the Fox bid.
“This is a great day for Comcast,” said Roberts in a statement. “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.”
The acquisition now awaits shareholder approval. If a majority of Sky stock holders accept the Comcast offer, Roberts said he anticipates closing the deal before the end of October. Fox issued a statement saying it’s considering its options regarding its own 39% stake in Sky.
“Sky is a remarkable story and we are proud to have played such a significant role in building the incredible value reflected today in Comcast’s offer,” Fox said in a statement.
Sky’s fate was determined by a rather unusual blind auction, lead by Britain’s Takeover Panel, after neither Fox or Comcast made a “best and final” offer for the Patrick Melrose co-producer. Deadline understands that the bidding for Sky officially kicked around midday in the UK and the winning bid came after the auction entered its third and final bidding round.
Comcast has paid £17.28 per share, compared to Fox’s blind bid of £15.67.
The U.S. cable giant launched its rival bid for Sky in February, as it sought to extend its global reach and strengthen its business at a time when Netflix and the other tech giants pose a growing threat. It also diversifies Comcast’s revenue at a time when cord-cutting is taking its toll in the U.S, boosting income from international operations to 25% of revenue from the current level of 9%.
In announcing the company’s competing bid, Roberts said he was attracted by Sky’s position as both a telecom operator — selling TV, internet and wireless plans across Europe — and as a media company. He saw strong parallels between Sky’s operation and Comcast’s own offerings.
Sky has around 23 million European subscribers in the UK and Ireland, Germany and Austria and Italy and has been aggressively moving into new markets including launching services in Spain and Switzerland. It has annual revenues of £13.6B (US$17.7B) and is one of the leading investors in television content in Europe with an annual programming spend of over £6B ($7.8B). Its recent originations including the Benedict Cumberbatch-fronted drug drama Patrick Melrose, which it co-produced with Showtime, as well as Amazon epic period drama co-pro Britannia and buddy cop series Bulletproof. Its first co-pro with HBO, Chernobyl, is set to launch next year.
The company, which has over 31,000 employees, is known for its sports content and recently secured the rights to the English Premier League for another three-year period at a reduced level. It also has a record of technological innovation with its Sky Q platform. The company also owns a number of production companies including Love Productions, makers of The Great British Bake Off.
Comcast had been in the driving seat after it topped Fox’s $32.5B bid with its own $34B bid in August. A trip to London, including a visit to a Sky store to test out its technology and helpful advice from a cab driver, helped cement interest.
The triumphant Sky bid hands Comcast a consolation prize, after it surrendered to Disney in the bidding war for 21st Century Fox’s film and TV assets.
Earlier this year Roberts lost out to Disney in an attempt to buy Fox’s entertainment assets, although it did force Disney to pay $20B more than it had previously intended to. It will be a major blow to the Murdoch family, which has waged an epic effort to roll up all of Sky during the better part of the last 10 years, but the scheme hit the rocks after a “phone hacking” scandal raised concerns among regulators about the stewardship of Sky News.
The unusual way that the mega-merger ended saw half of Britain’s top bankers working an extra shift over the weekend. Fox was advised by investment banks Deutsche Bank, Goldman Sachs, and JP Morgan, specialist advisory firm CenterView, law firms Allen & Overy, Skadden Arps Slate Meagher and Flom, and Simpson Thacher and Bartlett, and PR companies Brunswick and Portland. Comcast worked with specialist advisory firm Robey Warshaw, investment bankers Evercore, Bank of America, Merrill Lynch and Wells Fargo, law firms Davis Polk & Wardwell and Freshfields Bruckhaus Deringer and PR firm Tulchan. Sky was advised by Morgan Stanley, Barclays and PJT Partners, law firm Herbert Smith Freehills, and PR firm Finsbury.
Jeremy Darroch, Group Chief Executive, Sky, said, “This is the beginning of the next exciting chapter for Sky. Brian and his team have built a great business and we are looking forward to bringing our two companies together for the benefit of our customers and colleagues. As part of a broader Comcast we believe we will be able to continue to grow and strengthen our position as Europe’s leading direct to consumer media company. Today’s outcome is down to the hard work of tens of thousands of people who have built and developed this business together over the last 30 years. Sky has never stood still, and with Comcast our momentum will only increase.”
Martin Gilbert, Chairman of the Independent Committee of Sky, added, “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.”