Comcast Formalizes $30.7 Billion Bid for Sky

Isaac Cain
April 26, 2018

Comcast shares opened in the red in the US Wednesday, after the US cable company confirmed its £22 billion cash offer for Sky PLC.

"We are delighted to be formalizing our offer for Sky today", said Comcast chairman and CEO Brian Roberts (pictured) in a statement. On Wednesday the $155 billion company said it had identified $300 million of annual pre-tax cost savings and a further $200 million of gains from combining Sky's TV shows and movies with Comcast's NBCUniversal library.

Investors expecting a higher bid from Rupert Murdoch's 21st Century Fox, with backing from the Walt Disney Company's boss, Robert A. Iger, are betting on the triumph of sentiment over spreadsheet.

Fox has long owned a 39 percent stake in Sky and offered to buy the remaining 61 percent in December 2016.

Mr Murdoch's 21st Century Fox said it was "considering its options" but "remains committed to its recommended cash offer for Sky".

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He said that the European market was highly attractive and that the acquisition would "create a leading platform for growth", combining Comcast's 29 million United States customers with Sky's 23 million across the UK, Ireland, Germany, Austria and Italy.

21st Century Fox has been attempting to take full control of Sky but United Kingdom regulators have expressed concerns about Fox exerting too much power over the British media sector.

"It's really a question of: How much do they want it?" said Sarah Simon, a media analyst at Berenberg. Comcast's $31 billion offer for United Kingdom satellite broadcaster Sky just about passes financial muster. Comcast said it would establish a separate board for Sky News and guarantee a decade of spending at equal levels to last year's.

Sky News has become a flashpoint in Fox's bid due to competition fears centring on Mr Murdoch's ownership of The Sun, The Times and The Sunday Times newspapers. Sky shares rose 4 per cent to £13.61 on expectations of a counter offer. Sky is a highly complementary business and will expand Comcast's worldwide footprint in the United Kingdom and Continental Europe. If AT&T wins, Comcast would feel more emboldened to make a move, the people said.

Comcast said it anticipates realizing about $500 million in operating synergies, with about $300 million on the expense side and $200 million in revenue. Excluding some items, earnings amounted to 62 cents a share, beating the 59-cent estimate.

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