Comcast Outbids 21stFOX To Get Sky

Comcast Corp. topped 21st Century Fox Inc. in a weekend auction for Sky, winning the British broadcaster with a $38.8 billion bid that ends a monthslong takeover battle and promises Comcast a greatly expanded international footprint.

According to The Wall Street Journal, Comcast’s offer of £17.28 of a share, or about $22.59, per share surpassed Fox’s highest bid of £15.67 after three rounds of bidding Saturday, in a rare auction held by British regulators.The £29.7 billion valuation was by far the highest ever for such a process in the U.K., which has conducted a handful of smaller-scale auctions to settle intractable bidding wars. The winning bid represents a premium or more than double to Sky’s value before Rupert Murdoch’s Fox put Sky in play some 21 months ago.

Comcast won at a steep price. Its winning bid came in at £17.28 a share, up sharply from its £12.50 bid in February and Fox’s initial £10.75 bid in December 2016.

The jostling over Sky—which sells phone, TV and internet services to 23 million European customers and produces its own news, entertainment and sports programming—was part of a broader scramble by media companies to fortify themselves against a rising threat from Silicon Valley giants such as Netflix Inc.

Comcast executives say a combination with Sky—which like itself is a giant in both content and distribution—will boost its user base to 53 million and add more heft to invest in technology, programming and valuable sports-media rights. The merger will also help Comcast diversify its revenue base beyond the U.S., where cable cord-cutting is taking a toll on the traditional TV business.

Still, Sky was something of a consolation prize for the cable giant. This summer, it lost a bidding war to Walt Disney Co. for Fox’s entertainment assets. Disney agreed to pay $71 billion for Fox’s famed Hollywood studio and international assets, including a 39% stake in Sky that Fox had long held. That bigger deal is expected to close in coming months.

If Fox had won this weekend’s auction for Sky, Disney would ultimately have taken 100% control of the pay TV company. Instead, attention will now turn to whether Disney will sell the 39% stake in Sky—its value has increased by the bidding competition—or remain a minority partner for Comcast.

Analysts have raised the idea that Comcast could trade its 30% stake in Hulu to Disney—giving Disney overwhelming control of the streaming-video service—in return for the rest of Sky. Comcast has said it values its position in Hulu and just named some NBCUniversal executives to Hulu’s board.