Sky Takeover Explained

Comcast Corp. will pay $39 billion for British pay-TV group Sky PLC, after a monthslong bidding war with 21st Century Fox Inc. ended in a rare auction held by U.K. regulators. The British broadcaster became the target of a protracted battle involving some of the world's largest media companies, amid a larger wave of deal-making accelerated by the rise of streaming platforms.

WHO'S WHO?

Sky is Europe's largest pay-TV operator, with operations in seven countries. It had more than 23 million customers as of June 30, 2018. In the fiscal year to the end of June, Sky had revenue of GBP13.59 billion and a pretax profit of GBP864 million.

Comcast is an American cable juggernaut that owns NBCUniversal as well as the Xfinity cable and telecommunications service. It attempted to buy Fox's entertainment assets, making an unsolicited bid for them on June 13, but walked away weeks later.

Fox is an American TV and entertainment group that owns a 39% stake in Sky. Fox is controlled by the Murdoch Family Trust, which also controls Dow Jones's parent, News Corp, as well as several U.K. newspapers, among other properties. On June 20, Fox agreed to sell most of its assets to Disney--including the Sky interest. A previous deal reached in December, was challenged by Comcast, which dropped its pursuit of the assets on July 19.

The Walt Disney conglomerate houses in its portfolio the namesake Disney brand, Star Wars franchise owner Lucasfilm, U.S. sports channel ESPN and Marvel. Disney said on June 20 that it would assume full ownership of Sky if Fox buys the stake it doesn't own prior to completion of the deal between the two American companies.

WHY SKY?

With a market value of around GBP27.18 billion as of Sept. 20, Sky has a more modest scale than its American suitors. But it is in many ways a smaller version of what American media companies are trying to become: an integrated distribution platform that produces its own content.

HOW IS THE DEAL STRUCTURED?

Comcast offered GBP17.28 a share for Sky, securing the backing of the U.K. company's independent directors. Comcast's offer compares with Fox's highest bid of GBP15.67 a share after three rounds of bidding in an auction that ended on Sept. 22. The third and final round was blind, so neither side knew the other's offer until the results were announced.

Comcast's winning bid was 17% higher than its last offer prior to the auction of GBP14.75 a share and Fox's price of GBP14 a share. It was also up sharply from its initial GBP12.50-a-share bid, which was first disclosed in February and confirmed in April.

WHAT TOOK SO LONG?

Fox launched its bid to consolidate ownership of Sky in December 2016, but the deal was held up by British regulators. In December 2017, Fox agreed to sell most of its assets--including its current 39% stake in Sky--to Disney. From then on, the fate of the Sky takeover was linked to that of the much larger fight for the Fox assets. While regulators were looking into the deal, Comcast emerged as a suitor for Sky in February.

Mr. Murdoch's first attempt to take over Sky at the beginning of the decade failed amid public and political backlash against a phone-hacking scandal involving his now-defunct U.K. tabloid newspaper the News of the World.

When Fox tried to buy the U.K. satellite-TV company in 2016, its attempt fell under the scrutiny of regulators on concerns that the acquisition would concentrate too much control of British news media in Mr. Murdoch's hands. After a lengthy review, the Fox offer was formally cleared on July 12.

After officially posting the offer documents, both Comcast and Fox extended the period for Sky shareholders to accept their bids, having received few acceptances by their initial deadlines.

WHAT'S NEXT?

Comcast closed the acquisition of Sky on Oct. 9 after buying more than 75% of the shares in the company, including the 39% stake previously held by Fox. Sky will now seek to delist its shares from the London Stock Exchange.

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Stu Woo and Ben Dummett contributed to this article.

(END) Dow Jones Newswires

October 10, 2018 09:34 ET (13:34 GMT)

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