Pluto TV Bows Service in Germany, Austria

Pluto TV, the Los Angeles-based ad-supported online TV platform, has begun streaming operations in Germany and Austria. The launch follows a similar move in the United Kingdom in October through a collaboration with satellite TV operator Sky.

Sky, which was recently acquired by Comcast, is an investor in Pluto TV, along with ProSiebenSat.1 in Germany.

“The current timing of the launch of Pluto TV in Europe, especially in the German-speaking market, is ideal to harness the great potential for the distribution of linear video offerings via the Internet,”Olivier Jollet, managing director Europe, said in a statement.

Based in the company’s Berlin office, Jollet said the online TV platform’s marketing approach is to underscore the platform’s simplicity at a time when he says typical households subscribe to upwards of three or more – often redundant – over-the-top video services.

“[Consumers] are increasingly losing interest in this,” he said.

Pluto TV launched in 2016 as an app on Sony PlayStation about a year after Dish Network’s groundbreaking rollout of Sling TV – the first standalone online TV service offering pay-TV channels without a long-term contract.

The online TV market now includes PlayStation Vue, AT&T’s DirecTV Now, YouTube TV, Hulu with Live TV and Charter’s Spectrum TV Plus, among others.

Last month, Pluto inked a licensing deal with Discovery for channels such as Discovery Channel, HGTV and Food Network, Animal Planet, ID, Discovery Life, Science Channel, and TLC, among others.

 

 

 

Fox Ups Q1 Hulu Equity Loss 84%

Twenty-First Century Fox Nov. 7 disclosed a first-quarter (ended Sept. 30) equity loss of $114 million regarding its 30% ownership stake in Hulu. The loss represented an 84% increase from an equity loss of $62 million during the previous-year period.

Hulu, which is co-owned by Disney, Comcast and WarnerMedia, continues to generate significant losses on paper to its corporate owners, who license hundreds of millions of dollars in content to the 20+ million subscriber over-the-top video service.

While Hulu is nominally losing several billion dollars per year, its “losses” essentially amount to the excess it pays to its four sponsors over the revenues it generates, according to Wedbush Securities media analyst Michael Pachter.

“If the four [corporate] sponsors find a way to grow Hulu’s subscriber base, it should be able to achieve breakeven, and it should manage to gain market share from Netflix,” Pachter wrote in a recent note.

The analyst expects content from Disney, Fox, Universal, and Warner to be largely unavailable to Netflix going forward, leaving the SVOD pioneer trying to buy content from Sony, Paramount, Lionsgate, MGM, and smaller studios.

“Ultimately, we expect Hulu to become a formidable competitor to Netflix, particularly should Disney and Warner Bros. layer their own streaming offerings as premium additions to a basic Hulu subscription,” Pachter wrote.

Meanwhile, 20thCentury Fox Film (which includes 20thCentury Fox Home Entertainment) reported operating income of $277 million, an 8% increase from the $256 million reported in the prior-year quarter. The increase reflected higher contributions from the television production studio led by higher SVOD licensing of animated product.

Quarterly revenue decreased 7% to $1.82 billion, primarily reflecting lower theatrical revenue from a lower volume and mix of films released in the current quarter partially offset by higher SVOD revenue at the television production studio.

“We continue to deliver against our growth plan even as we make important strides toward completing our Disney transaction and launching Fox in the first half of 2019,” executive chairmen Rupert Murdoch and his son Lachlan said in a statement.

Separately, Fox posted a $147 million equity gain from its 39% stake in British satellite TV operator Sky – up 34% from an equity gain of $110 million last year. Fox recently sold much of its Sky stake to Comcast.

Finally, the European Commission approved Disney’s acquisition of 20thCentury Fox provided it sells its stake in A&E channels (History, H2, Blaze, Lifetime, Crime + Investigation) distributed overseas.

“The commission’s decision is conditional upon full compliance with the commitments,” the EC said in a statement.

 

Report: Netflix to Reach 10 Million U.K. Subscribers by Year’s End

Netflix is reportedly set to reach 10 million subscribers in the United Kingdom by the end of the year — about seven years after launching in the region, including Ireland. The U.K. was the subscription streaming video pioneer’s second international expansion after Canada in 2010.

Major sub drivers include recent Comcast acquisition Sky — the British satellite TV operator, which now affords direct access to Netflix for its Sky Q subs. And Virgin Media, with more than 30% of subs accessing Netflix through their set-top device, according to research firm MTM London.

MTM disclosed the data — based on an online survey of more than 3,000 respondents over the age of 16 – in its latest Screen Think report.

As expected, the data confirms the popularity of over-the-top video among younger consumers, with nearly 40% saying they look to Netflix, YouTube and Amazon Prime Video first when looking for video content.

“The … study provides a fascinating snapshot of a market in transition, demonstrating the significant impact of Netflix and other OTT video services in the U.K. market,” Jon Watts, managing partner at MTM, said in a statement.

Watts said U.K. broadcasters and pay-TV providers have upped their respective OTT video strategies and remain in a strong competitive position through streaming video products such as the BBC iPlayer, All4, the ITV Hub, My5 and Now TV.

“We’re clearly seeing signs of significant shifts in consumer attitudes [toward Netflix] and perceptions of quality, in terms of content, value for money and innovation,” he said.

Netflix ended its most-recent fiscal period with more than 130 million paid subscribers globally.

 

Sky Boss Jeremy Darroch Says He’s ‘Sticking Around’ Euro Pay-TV Operator Following Comcast’s Acquisition

Jeremy Darroch, chief executive of Comcast Corp.’s newly-owned Sky subsidiary, said he plans on remaining at the U.K. satellite TV operator following Comcast’s $40 billion acquisition.

Speaking Oct. 25 on Comcast’s fiscal call, Darroch said he looked forward to leading Sky, which has more than 15 million subscribers, including subsidiaries Sky Deutschland and Sky Italia.

“We’re all energized by the next phase of growth and the additional opportunities that being part of Comcast will bring, on top of delivering our existing plans,” he said.

The news seemed to please Comcast chairman/CEO Brian Roberts, who introduced Darroch on the fiscal call. Indeed, for Darroch – who received a $47.4 million golden parachute following the close of the acquisition – not remaining at Sky could have proved a challenge to Comcast’s nascent international strategies.

“We’re really excited and pleased with the [Sky] management team” said Roberts. “We are delighted that Jeremy and many of the team, the senior team, we hope and believe are going to stay with the company.”

With Roberts agreeing to pay more than twice what 21stCentury Fox offered for outstanding interest in Sky, media analysts in the United States have questioned how the deal will be accretive for Comcast shareholders going forward.

“It seems as though they would like investors to forget that Sky is also a satellite TV provider, and satellite video distribution is increasingly becoming obsolete,” Craig Moffett, with MoffettNathanson Research, wrote in a note last month.

 

 

Fox Selling Sky Stake to Comcast — With Disney’s Blessing

Rupert Murdoch is a sly fox. After his 21stCentury Fox media company lost to Comcast in a weekend auction for outstanding control of Sky Plc., the media tycoon has agreed to sell Fox’s 39% stake (worth about $15 billion) in the British satellite TV distributor to Comcast – at the new elevated share price of £17.28 ($22.60).

To do so, Fox had to get Disney’s approval after the latter acquired select Fox assets, including 20thCentury Fox Film and Fox’s stake in Sky, for $71 billion.

After Comcast emerged victorious last weekend in a special auction held by British regulators – an event that saw Comcast agree to pay nearly 70% more for Sky than Fox had original offered, fiscal common sense prevailed over ego.

In a statement, Fox said it wished its colleagues at Sky well going forward. Murdoch helped launch Sky in 1989 through the merger of Sky Television and British Satellite Broadcasting.

“In light of the premium Comcast has agreed to pay for Sky, we and Disney have decided to sell 21CF’s existing 39% holding in Sky to Comcast. We congratulate Comcast on their pending acquisition,” said Fox.“We are proud of the role our company has played in building Sky, and of the outstanding value we have delivered for shareholders of 21CF and Sky, and customers across Europe.”

For Disney, the transaction, coupled with the divestiture of the Fox Sports Regional Networks, significantly reduces the amount of debt it would incur in acquiring Fox assets.

Disney, in a statement, said it would rather focus its “considerable investment” in the branded direct-to-consumer offering launching in late 2019 and the new ESPN+ sports streaming service. It will also seek to increase investment in Hulu’s content offerings and international distribution. Disney and Fox each currently hold 30% stakes in Hulu.

“Along with the net proceeds from the divestiture of the RSNs, the sale of Fox’s Sky holdings will substantially reduce the cost of our overall acquisition and allow us to aggressively invest in building and creating high-quality content for our direct-to-consumer platforms to meet the growing demands of viewers,” said Disney CEO Bob Iger.

The acquisition has received formal approval from shareholders of both companies, and Disney and 21st Century Fox have entered into a consent decree with the U.S. Department of Justice that allows the acquisition to proceed, while requiring the sale of the Fox Sports Regional Networks. The transaction is subject to a number of non-U.S. merger and other regulatory reviews

For Murdoch and Co., selling Sky marks the end of an era.

When Murdoch-led Fox launched Sky nearly three decades ago, it nearly went broke operating four channels produced from a prefab structure in an industrial park on the fringes of west London.

“We bet — and almost lost — the farm on launching a business that many didn’t think was such a good idea,” Fox said. “Today, Sky is Europe’s leading entertainment company, a world-class example of a customer-driven enterprise … and we have created more than 31,000 jobs across the continent.”

Comcast Acquires 30% of Sky Stock Following Weekend Auction Win

Comcast Corp. Sept. 25 disclosed it has acquired 30% of British satellite TV operator Sky Plc., shares following a weekend takeover auction win over 21st Century Fox.

Fox, which owns 39% of Sky, is selling its stake, in addition to 20thCentury Fox Film, to The Walt Disney Co.

Comcast said it would continue to acquire Sky shares from investors for the £17.28 ($22.60) per share price hammered out in the special auction for controlling interest in the pay-TV operator. The share price values Sky at more than $40 billion. Fox had offered £15.67 per share.

“Comcast Bidco will continue to acquire Sky Shares in the market from eligible shareholders outside the United States at up to and including £17.28 in cash for each Sky Share,” Comcast said in a statement first reported by CNBC, which is owned by Comcast’s NBC Universal subsidiary.

Indeed, Comcast needs to acquire 50% of Sky’s stock plus one additional share to complete the takeover. Sky’s board approved Comcast’s offer, calling it “materially superior” to Fox’s bid and called on Sky investors to “immediately” accept it.

Notably, when Fox first bid on Sky’s remaining stock in late 2016, its offer totaled £10.75 per share.

Meanwhile, Comcast shares continue to decline following the auction, with some analysts contending the media giant overpaid for a waning distribution model (satellite TV).

Not so for Liberty Global CEO Michael Fries, who called Comcast’s purchase price a “great outcome” for Sky shareholders. The executive said it values the European pay-TV market, an ecosystem he claims is often overlooked.

Fries called on Comcast CEO Brian Roberts to remain “rationale” on the deal and to give it time to playout.

“I think the purchase price is terrific,” he told Bloomberg.

 

Comcast Tops Fox in Sky Satellite TV Auction

Comcast Sept. 22 disclosed it has prevailed over 21st Century Fox with an offer price of £17.28 per Sky share to acquire majority control of the U.K. satellite TV operator in an auction mandated by British regulators. This offer implies a value of $40 billion (£30.6 billion) for the fully diluted share capital of Sky. The announcement ends the competitive bidding process for Sky.

Fox, which controls 39% of Sky, had sought to acquire outstanding Sky shares it did not own for £14 per share. Comcast had offered £14.75 per share. When Sky investors failed to adopt either offer, an auction was ordered by The Panel on Takeovers and Mergers.

Sky shareholders must now ratify the Comcast offer.

“This is a great day for Comcast, chairman/CEO Brian Roberts said 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. We now encourage Sky shareholders to accept our offer, which we look forward to completing before the end of October 2018.”

 

U.K. Regulator Eyeing One-Day Auction for Satellite TV Operator Sky

With an apparent impasse on competing acquisition offers accepted by Sky shareholders from 21stCentury Fox, Comcast and The Walt Disney Co., a U.K. regulatory agency is set to take the unusual step of authorizing a one-day auction between the competing suitors.

The Panel on Takeovers and Mergers Sept. 20 issued a statement declaring that after discussions with all parties involved, an auction for controlling interest in Sky would begin at 5 p.m. on Sept. 21 and end sometime on Sept. 22 after three rounds of bidding. The bids will not be made public during the auction but will reportedly be made available by Sept. 24.

“On the basis that neither offeror has declared its offer final, such that either offer may be increased or otherwise revised, a competitive situation continues to exist for the purposes of ‘Rule 32.5 of the Takeover Code’”, wrote the panel.

The Panel said that by 7.00 am (London time) on Sept. 24, each of the Sky suitors is required to make an announcement under “Rule 2.7 of the Code” of a revised offer in respect of its latest bid lodged in accordance with the auction procedure (or alternatively, if it did not lodge an increased bid during the auction procedure, a confirmation of its pre-existing offer).

To accommodate the auction, both Comcast, Fox (and Disney, which is acquiring 20thCentury Fox and Fox’s 39% stake in Sky for $71 billion) extended the merger deadline until Oct. 6.

With 23 million subscribers across the U.K., Italy and Germany, Sky is a lucrative pay-TV operator and asset to Comcast and Disney looking to expand their respective brands globally (Comcast) and thwart Netflix’s ongoing global reach (Disney). The company generated more than $12.9 billion in revenue in 2017.

Sky investors have long eyed a bidding war for the company, which is why the stock is trading significantly higher (£15.78) than Comcast’s $34 billion (£14.75 per share) offer compared to Fox’s £14 per share bid.

Indeed, neither offer has resonated with Sky shareholders, with less 30% of stakeholders tendering Comcast’s offer compared to 0.07% for Fox’s offer.

A timeline on the Sky acquisition is as follows:

On Dec. 15, 2016, Fox announced a cash offer for the shares in Sky it did not already own at £10.75 per Sky share.

On Feb. 27, 2018, Comcast announced that it was considering making an offer for Sky. On April 25, Comcast announced a cash offer at £12.50 per Sky share. Later that day, the independent directors of Sky announced that they were withdrawing their recommendation of the Fox offer.

On July 11, Fox announced an increased cash offer for Sky at £14.00 per Sky share. Later that day, Comcast upped its cash offer for Sky at £14.75 per Sky share.

Netflix Finally Available on Sky

Netflix, beginning Sept. 19, is now available as a direct link to U.K. pay-TV service Sky – about six months after first announcing a partnership with the high-profile satellite TV operator.

The SVOD behemoth is available to Sky’s most-expensive Q bundle for an extra £10 monthly as part of Sky’s “Ultimate On Demand” add-on feature. Existing Netflix subscribers can link their account to Sky Q or log onto the Netflix app separately.

But direct access, including Netflix original programing on display alongside traditional pay-TV selections is precisely why multichannel video program distributors such as Comcast, Virgin Media (since 2013), Altice USA, Charter Spectrum, Cox, Liberty Global and T-Mobile, among others, have embraced Netflix.

“We are partnering with a growing number of pay-TV providers across the world to the benefit of our mutual customers,” Netflix said in its Q4 shareholder letter. “These partnerships make it easier for consumers to sign up, enjoy, and pay for Netflix, while our service allows our partners to deepen their relationships with these subscribers.”

Amber Pine, commercial director at Sky, says the satellite TV operator with about 9 million U.K. subscribers has a lot of mutual customers.

“The depth of this integration provides them with a unique experience where they can have the best of both worlds,” Pine said in a statement.

Indeed, British regulator Ofcom recently reported that over-the-top video across the pond has now topped pay-TV in the number of subscribers: 15.4 million to 15.1 million.

“On a simplistic level, Sky and Netflix look like direct competitors,” Andrew McIntosh, the head of TV analysis at Enders Analysis, told Wired. “But they act on different levels, which Sky is well aware of. Sky doesn’t offer what Netflix offers. Now it is providing what it can’t offer, but still through the Sky package. And it makes Sky look good, because it is putting the customer first. It’s a very clever move.”

And interesting, considering both Comcast, Fox (and Disney) have competing acquisition bids on the table for Sky.

 

Fox, Comcast Extend Offer for Sky to Oct. 6

As expected, 21stCentury Fox has extended its offer for remaining shares of U.K. satellite TV distributor Sky to Oct. 6 – the same date Comcast extended its competing offer.

Comcast currently holds the higher bid: $34 billion (£14.75 per share) compared to Fox’s £14 per share. Yet neither offer has resonated with Sky shareholders, with less 30% of shareholders tendering Comcast’s offer compared to 0.07% for Fox’s offer.

Fox, which is controlled by Rupert Murdoch, currently owns 39% of Sky. The Walt Disney Co. outbid Comcast for select Fox assets, which include 20thCentury Fox Film and Sky.

With Sky’ stock closing down Sept. 17 at £15.78 per share in London, it’s clear investors are hoping for a superior bid from either Comcast, Fox or even Disney.

Following the deadline, corporate takeover rules in the United Kingdom mandate a five-day sealed auction overseen by regulators with Comcast, Fox and Sky agreeing on the terms.