Comcast challenges Murdoch with $31 billion offer for Sky
U.S. cable giant Comcast (CMCSA) is making a play for British pay TV broadcaster Sky, a move that threatens to thwart the takeover ambitions of media mogul Rupert Murdoch. Comcast is offering 22.1 billion pounds ($29.50 billion) for Sky. The proposed cash offer values each Sky share at 12.50 pounds, which represents a 16 percent premium to the bid made by Murdoch's 21st Century Fox (FOXA).
Comcast CEO Brian Roberts called Sky "an outstanding company" that would boost Comcast's global presence.
"We think that Sky would be very valuable to us as we look to expand our presence internationally," he added.
He noted that Comcast already has a strong presence in London and would use Sky as a "platform" for growth in Europe.
Sky operates in Austria, Germany, Ireland and Italy as well as the U.K. It has 22.5 million customers, attracted by offerings such as English Premier League soccer and "Game of Thrones."
Fox's bid to buy the 61 percent of Sky it does not already own has been slowed by regulatory problems in Britain.
The primary problem is a preliminary finding by the competition regulator that a Fox takeover would give the Murdoch family too much control of Britain's media.
The competition authority last month raised concerns about Murdoch's power because his family trust already controls newspapers such as the Times and the Sun, and the deal would increase its control of the influential Sky News channel.
Fox's bid for Sky is accompanied by a broader $52.4 billion takeover offer for Fox from Walt Disney Co. So a Comcast takeover of Sky could complicate Disney's proposed takeover of Fox.
Comcast itself had been in talks to buy parts of Fox, so its bid for Sky could be a more direct way to acquire media assets in Europe, analysts say.
Shares in Sky surged Tuesday upon the announcement of Comcast's interest. Its share price jumped 19 percent to 13.10 pounds in London.
Laith Khalaf, senior analyst at Hargreaves Lansdown, noted that Sky's value increased after it secured English Premiership football rights at a competitive price at an auction two weeks ago.
He said investors seem to anticipate further developments, such as a potential counterbid from Fox.
"This isn't a done deal yet," he said. "Sky shares are now trading 2 percent above the Comcast offer price, so the market clearly smells the scent of some more action before this saga draws to a close."