Comcast Ends Pursuit of 20th Century Fox, But Not Sky

As expected, Comcast Corp. July 19 officially dropped out of its attempt to acquire select assets of 21st Century Fox, including 20th Century Film and majority ownership of Hulu.

The media giant was considering upping its $65 billion offer for Fox, which included a 39% stake in British satellite TV distributor Sky.

“Comcast does not intend to pursue further acquisition of the Twenty-First Century Fox assets and, instead, will focus on our recommended offer for Sky,” the company said in a statement.

Comcast currently has a $34 billion (£14.75 per share) offer on the table for Sky, which exceeds Fox’s revised offer of £14 per share.

The decision should clear a path for Disney’s $71.3 billion bid, which has been approved by Rupert Murdoch, majority shareholder of 21st Century Fox.

“I’d like to congratulate [Disney CEO] Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company,” said Comcast chairman/CEO Brian Roberts.

 

 

Comcast Tops Fox’s Bid for Sky as British Government Greenlights Murdoch’s Offer

NEWS ANALYSIS — As expected, Comcast Corp. increased its all-cash offer for British satellite TV operator Sky to $34 billion (£26 billion), or £14.75 per share, exceeding 21st Century Fox’s revised offer of £14 per share. Fox, which is controlled by Rupert Murdoch, currently owns 39% of Sky.

This came the day before the British government — after months of regulatory review — formally cleared Fox’s pursuit for remaining interest in Sky.

“It’s now a matter for Sky shareholders to decide whether to accept 21stCentury Fox’s bid,” Jeremy Wright, U.K. cultural and media secretary, said in a July 12 statement.

Which could be meaningless considering the third player (Disney) in this high-stakes media consolidation battle last month upped its bid for Fox to $71.3 billion (which includes Fox’s stake in Sky) after Comcast offered $65 billion — topping the Mickey Mouse’s company’s initial $52.4 billion acquisition amount.

Disney CEO Bob Iger has called Sky – with 23 million subscribers in the U.K., Germany and Italy, and a budding over-the-top video business – the “crown jewel” in the Fox deal.

Comcast claims its superior cash offer (Disney’s bid is cash and stock) has been recommended by an independent committee on Sky’s board of directors.

The company says it has the relevant regulatory approvals in the European Union, Austria, Germany, and Italy —  and expects to complete the acquisition before the end of October.

In a statement, the Philadelphia-based media giant said it has long admired Sky and believes the satellite operator is an outstanding company and a great fit with Comcast Cable.

“Today’s [July 11] announcement further underscores Comcast’s belief and its commitment to owning Sky,” said the company headed by cable veteran Brian Roberts.

Fox and Disney shareholders are slated to vote July 27 on the latter’s bid for 20th Century Fox Film, Sky and related assets. This gives Comcast about two weeks to up its Fox bid. Or does it?

BTIG Research senior analyst Rich Greenfield — in response to media scuttlebutt Comcast and Disney could stop the fiscal escalations with Comcast taking Sky and Disney opting for Fox’s assets — says such a move would be detrimental to both sides.

He said combining Disney and 20th Century Fox Film would dwarf Comcast-owned Universal Studios, while Disney abandoning Sky would give Comcast greater distribution.

“Why start a fight you do not want to finish?” Greenfield wrote in a blog note. “If Disney’s acquisition goal is adding 100% owned and controlled subscriber relationships, why go through all this effort and allow Comcast to own all of or at the very least control Sky?”

Comcast Shareholders Nix Lobbying Transparency

Comcast shareholders June 11 voted against a proposal that would have called for greater disclosure of funding spent by the media company on industry lobbying.

Comcast spent more than $29 million in 2016 and 2017 on federal lobbying activities — fourth highest among U.S. companies, according to shareholder Kate Monahan. Speaking at Comcast’s annual shareholder meeting, Monahan claimed the company fails to reveal how much is spent lobbying at the state and local level.

She called on shareholders to approve her proposal requesting the board disclose all funds spent on lobbying. Monahan also called on Comcast to exit the American Legislative Exchange Council, a non-profit she claimed works against clean energy adoption.

“Investors have no idea how much the company is spending overall and yet the company could easily and inexpensively disclose this information,” Monahan said.

Shareholders, not surprisingly, rejected the proposal, according to preliminary vote tallies.

CEO Brian Roberts, after reiterating company highlights in fiscal year, reminded shareholders that anyone fortunate to buy a lot Comcast stock 46 years ago would be very rich today.

“If you had bought 1,000 shares of our stock with my dad at $7 a share in 1972, you would now have $10 million versus nearly $700,000 if you’ve invested in the S&P 500,” Roberts said.

Comcast Rethinking OTT Opposition?

NEWS ANALYSIS – Comcast’s surprise $30.9 billion bid last month for British satellite TV operator Sky may be more than an effort to thwart Disney’s global ambitions. It could signal that the country’s largest cable operator is finally coming to terms with over-the-top video.

In December, Disney announced it would acquire select 21st Century Fox assets, including Sky, for more than $52 billion.

To be sure, Comcast CEO Brian Roberts said all the right things: Sky has “great people” and “capable management,” in addition to 23 million subscribers across the U.K., Italy and Germany. What he also admired is Sky’s technological innovation.

After Disney spent billions acquiring New York technology company BAMTech from MLB Advanced Media to further its branded OTT video platforms, Comcast had to reconsider its longstanding opposition to distribution channels other than linear television.

As Netflix revolutionized video distribution by creating the SVOD business model, Comcast responded with TV Everywhere, which attempted to give subscribers on-demand access to programing on digital devices. It then became the first pay-TV operator to offer transactional VOD and digital sell through of Hollywood movies.

While TV Everywhere has finally taken hold with consumers – after lengthy indifference – Netflix has more 117 million subscribers, including 53 million in the United States compared to Comcast’s 21.3 million.

At the same time, executives at Comcast Cable and NBC Universal continued to downplay OTT distribution. In a fiscal call last year, Steve Burke, CEO of NBC Universal, said that while the media company had deals with online TV services such as Sling TV, DirecTV Now, Hulu Live and YouTube TV, he doubted the platforms would make much of an impact.

“They’re off to a relatively slow start,” Burke said.

Indeed, NBC’s attempt at a standalone OTT comedy platform (SeeSo) shuttered after 18 months.

Neil Smit, former CEO of Comcast Cable, in 2016 infamously declared that he hadn’t seen an “OTT model that really hunts.” Less than a year later Smit stepped down as CEO, replaced by company veteran Dave Watson, whose stance on OTT is only slightly changed from his predecessor’s.

But opinions can change in the face of market reality.

NBC, working with Roku, announced the launch of a reality TV streaming service in the U.K. Dubbed, “hayu,” the service offers more than 5,000 episodes of U.S. and British reality TV shows, including “Keeping Up with the Kardashians,” and spin-off, “Life of Kylie,” in addition to “The Real Housewives” and “Million Dollar Listing” franchises.

“[Comcast’s purchase of] Sky brings with it a trove of exclusive content and rights that could be the basis of an OTT service with a genuine moat, capable of rivaling Netflix itself,” analyst Craig Moffett with MoffettNathanson Research wrote in a March 12 note.

Indeed, while Comcast CEO Roberts has embraced Netflix to the point of offering it seamlessly to cable subscribers, he understands well enough that the SVOD pioneer has morphed into much more than global distributor.

“One can assume that Comcast believes that the combination of Sky’s and NBC Universal’s proprietary content will be enough of a deterrent to ensure that the margins available to an OTT provider don’t simply get competed away,” Moffett wrote.

Comcast Offers $31 Billion in Cash for Sky

In a major consolidation move across the Atlantic, Comcast Feb. 27 announced a $31 billion cash offer for British satellite giant Sky. The $17.40 per share offer bests Rupert Murdoch’s $14.96 per share offer through 21st Century Fox.

Murdoch has sought to acquire the remaining 61% ownership of Sky after his initial 39% stake.

“Sky and Comcast are a perfect fit: we are both leaders in creating and distributing content,” Comcast CEO Brian Roberts said in a statement.

Sky provides sports programming, movies and broadband service to 23 million homes across Britain, Ireland, Germany, Italy and Austria.

Notably for home entertainment, Sky’s “Buy & Keep” platform last October began offering consumers of digital movies a Blu-ray copy sent separately in the mail. Sky previously only offered a DVD backup.

Comcast, which owns NBC Universal and DreamWorks Animation, is seeking to outmaneuver The Walt Disney Co., which has a $52 billion offer for select Fox assets, including Sky.

The cable giants contends the acquisition would enhance its entertainment, distribution, and technology prowess domestically, while expanding it international footprint to more effectively compete in the rapidly changing and competitive entertainment and communications landscape.

“We already have a strong presence in London, and Comcast intends to use Sky as a platform for our growth in Europe,” said Roberts.

In a statement, 21st Century Fox said it remained committed to its $15 billion cash offer for the remaining stake in Sky, announced Dec. 15, 2016.

“We note that no firm offer has been made by Comcast at this point. A further statement will be made if appropriate,” Fox said in a statement.

Media reports suggest Roberts is also considering another bid for Fox assets after Comcast’s original $60 billion offer was rejected in favor of Disney’s.