US cable giant Comcast offered to buy Sky for $31 billion in an unsolicited approach, taking on Rupert Murdoch’s Fox and Bob Iger’s Walt Disney in the battle for Europe’s biggest pay-TV group.
The world’s biggest entertainment company, which owns NBC and Universal Pictures, said it proposed to offer £12.50 per share, significantly higher than the £10.75 Fox had agreed to pay for the British company.
The offer pits Comcast’s Brian Roberts against Murdoch, the 86-year-old tycoon who helped to launch Sky and pioneer pay-TV in Britain. Iger is also a long-time rival after Comcast tried and failed to buy Disney for $54 billion in 2004.
Disney had agreed to buy Sky from Fox at a later date along with other assets in a separate deal worth $52 billion.
Media owners have been forced to rethink their strategies and look for growth after the success of online groups Netflix Inc. and Amazon.com Inc. prompted customers to start ditching their subscriptions. Comcast bid $60 billion last year to clinch a deal with Murdoch’s Fox before losing out to Disney.
Shares in Sky soared 21 per cent to £13.34, indicating that investors expect a bidding war for a company that provides sports programming, films and broadband to 23 million homes across Britain, Ireland, Germany, Italy and Austria.
“Sky and Comcast are a perfect fit: we are both leaders in creating and distributing content,” Comcast chief executive officer Roberts, 58, said. “We think Sky is an outstanding company.”
Murdoch’s Fox agreed to buy the 61 per cent of Sky it did not already own in December 2016 but the takeover has been repeatedly held up by regulatory concerns that the media tycoon holds too much influence in Britain.
The shares had been trading above the asking price since Sky this month agreed to pay less than expected for Premier League soccer rights, boosting its future earnings and prompting investors to demand a higher offer. Formed in 1990, Sky has built its business by offering leading content and technology. It snapped up Murdoch’s pay-TV groups across Europe in 2014 to offer a distribution platform across the continent that is now proving attractive to the big US content owners.
“Fox will have to sharpen their pencils now,” said Neil Campling, at Mirabaud Securities. “There is no way we can see that Fox will walk away given how advanced the regulatory clearance process is.”
Comcast said it had not yet engaged with Sky over the proposal and a spokesman for Sky declined to comment.
Sky’s chairman is Murdoch’s son James, who is the chief executive of 21st Century Fox, so Comcast will have to gain the support of the independent shareholders for its better offer if it does not make a hostile bid.
Comcast’s Brian Roberts, the son of Ralph who founded the company in 1963, called Sky’s deputy chairman Martin Gilbert just before 7am yesterday to notify him of the offer, and called Sky chief executive Jeremy Darroch shortly afterwards, minutes after its statement had been published.
Disney’s Iger, in Paris on a business trip, declined to comment yesterday.