Fox: Disney Could Buy Sky News Separately

Media giant 21st Century Fox April 3 floated the prospect The Walt Disney Co. could acquire Sky News in an independent deal to assuage British regulators in its $16 billion acquisition for the remaining 61% stake of the European satellite operator.

Disney’s acquisition of Sky’s news division would be separate from its $52 billion acquisition of 20th Century Fox Film Corp., which includes the corporate parent’s stake in Sky, according to The Wall Street Journal. Fox chairman Rupert Murdoch owns The Journal.

British regulator Competition and Markets Authority (CMA) in January issued a report critical of the merger, claiming Murdoch’s majority ownership of Sky would place too much (i.e. conservative politics) control of British media in hands of one person.

Fox contends selling Sky News to Disney (which owns ABC TV) should alleviate regulatory concerns. It has also pledged 15 years of guaranteed funding for the news division.

“The enhanced remedies we proposed to safeguard the editorial independence of Sky News addressed comprehensively and constructively the [CMA’s] provisional concerns,” Fox said in a statement.

Regardless, Fox faces competition from Comcast, which has submitted an unsolicited $31 billion bid for Sky – nearly twice that of Murdoch’s offer.

Comcast, which owns NBC Universal and DreamWorks Animation, is eying Sky for its European distribution plans. Comcast in 2004 attempted a hostile takeover of Disney, which was scuttled by the latter’s shareholders. Comcast also reportedly offered a 15% premium on Disney’s bid for 20th Century Fox, which was rejected by Murdoch over U.S. regulatory concerns.

 

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.

Netflix and Sky Ink European Pact

Everyone wants a piece of British satellite TV operator Sky, including Netflix.

Sky and Netflix March 1 unveiled an agreement to bundle the SVOD pioneer into an updated Sky TV subscription pack. This partnership – the first of its kind – will give Sky subs in the United Kingdom and Ireland later this year direct access to Netflix through its Sky Q platform.

Netflix will launch on Sky Q platforms in Germany, Austria and Italy thereafter. Sky provides sports programming, movies and broadband service to 23 million homes across Britain, Ireland, Germany, Italy and Austria.

Sky will make Netflix available to new and existing customers via a TV pack combining Sky and Netflix content side-by-side for the first time – including thousand hours of Ultra HD content, complementing Sky Q’s UHD programming.

“By placing Sky and Netflix content side-by-side, along with programs from HBO, Showtime, Fox and Disney, we are making the entertainment experience even easier and simpler for our customers,” Sky CEO Jeremy Darroch said in a statement.

Integration of the Netflix app essentially turns the SVOD behemoth into a pay-TV channel enabling Sky customers – via single monthly bill and user interface – to peruse myriad programs, including “Britannia,” “Billions” and “Big Little Lies” with “The Crown,” “Stranger Things” and “Black Mirror.”

Existing Netflix customers will be able to migrate their account to the new Sky TV bundle, or sign into the Netflix app using their existing account details.

In the UK and Ireland, Sky will launch Netflix as a standalone app on Now TV’s family of streaming devices (manufactured by Roku), including on the recently launched Now TV Smart Stick. Sky Ticket in Germany and Austria, and Now TV in Italy, will launch a standalone app on their devices.

“With this innovative new partnership … Sky’s customers will be able to seamlessly access all the best entertainment in one place,” said Netflix CEO Reed Hastings.

The deal comes after Comcast announced a $31 billion offer to acquire Sky – topping an existing bid by Rupert Murdoch’s 21st Century Fox to acquire the remaining 61% stake it doesn’t own. In addition, the Walt Disney Co. has a $52 billion offer to acquire select Fox assets, including Sky.

Sky Bows Original Movies Platform

Taking a page from the Netflix playbook, U.K. TV satellite operator Sky Jan. 25 announced the launch of an original content production platform, dubbed Sky Cinema Original Films.

Sky is the largest satellite TV operator in Europe with 23 million subscribers, and co-owned (39%) by 21st Century Fox. It could become majority owned by The Walt Disney Co. should the latter’s $52.4 billion Fox asset purchase come to fruition.

In addition to original productions, Sky Cinema Original Films would feature more than 1,000 movies available on demand. Unique to the offering is that the original movies will be available to subscribers day-and-date with their theatrical launch.

The strategy mirrors Netflix’s controversial move to make all of its original movies available for global streaming concurrent with theatrical screening. Major theater operators in the U.S. have responded by boycotting Netflix movies.

The first Sky original movie, animated comedy Monster Family, will launch in March, with the Rob Cohen’s action movie, The Hurricane Heist set to follow in April. Sci-fi crime thriller Anon and British production Final Score are slated for later this year.

“Sky’s original content strategy has already been successful across eight genres of television – now we’re taking it to film to give our content-hungry customers even more reasons to keep coming back,” Ian Lewis, group director of Sky Cinema, said in a statement.

 Separately, Sky inked a new content license deal in the U.K. and Germany with Warner Bros. The pact gives subscribers faster access to new titles and a stronger line up of Warner movie franchises, including all Harry Potter titles, Christopher Nolan’s Batman trilogy, The Lord of the Rings, and the Lego movies.

Sky is also the exclusive distributor of U.S. pay-TV series, “Billions,” “Westworld,” “Big Little Lies” and “Modern Family.”

U.K. Regulator Rules Against Fox/Sky Merger

Rupert Murdoch’s quest to acquire outright control of British satellite operator Sky Jan. 23 suffered a setback after a government regulator found the $15 billion acquisition by 21st Century Fox would not be in the public interest. Fox currently owns 39% of Sky.

Following referral from the Secretary of State for Digital, Culture, Media and Sport, the Competition and Markets Authority (CMA) had been tasked with investigating the deal’s media plurality and commitment to broadcasting standards.

Specifically, the CMA found media plurality concerns for viewers on a Fox-owned Sky, including access to a wide range of political viewpoints.

The group found that due to its control of News Corp, the Murdoch family has significant influence over public opinion. Full ownership of Sky by Fox would strengthen this even further.

The watchdog said media plurality goes to the heart of the U.K.’s democratic process and as such is given legal protection.

CMA said the ruling did not involve a lack of a “genuine commitment” by Fox/Sky meeting broadcasting standards in the U.K.

“Our in-depth investigation also considered whether the deal would be against the public interest regarding broadcasting standards,” Anne Lambert, chair of CMA, said in a statement. “Due to their existing track record in the U.K., and the range of policies and procedures the companies involved have in place to ensure broadcasting standards are met, we did not find public interest concerns in this regard.”

Notably, should U.S. regulators okay Walt Disney’s $50 billion acquisition of 20th Century Fox, Disney would assume control of Fox’s stake in Sky.

The CMA will present a final report to Matthew Hancock, secretary of state for digital, culture, media and sport, by May 1. Hancock will make the final decision on the proposed deal.

 

Sky Partners With Jaunt for Expanded VR Content

Sky, the U.K.-based satellite giant, Jan. 8 announced it has partnered with Jaunt International to help expand its virtual reality entertainment offerings in 2018.

Specifically, Sky – which is majority owned by Disney following its acquisition of key 21st Century Fox assets – will incorporate the Jaunt XR Platform enabling media companies, brands, content aggregators and enterprise customers the ability to deliver immersive content directly to audiences through their owned and operated channels.

Sky VR Studio, Sky’s in-house virtual reality studio, will use the technology to deliver content to consumers via the Sky VR app.

Sky claims it becomes the first media company to adopt the Jaunt XR Platform for the distribution of VR content, which includes allowing viewers to explore inside The Jungle Book’s King Louis’ temple as well as ride a Star Wars X-wing Starfighter.

“The viewing habits of our customers are evolving and the appetite for immersive content is growing day by day,” Gary Davey, managing director of content at Sky, said in a statement.

This year Sky will launch “Hold the World,” an inside look at the Natural History Museum’s collection of rare objects featuring a three-dimensional hologram of Sir David Attenborough.