Comcast Sky Takeover – Volatility Ahead?

Shareholders in media broadcasting company Sky will be rubbing their hands with glee as the price of Sky shares has doubled in the past year. The American cable operator Comcast won the auction sale for Sky on 22 September, with shareholders achieving a valuation of £17.83 per share.

Sky Takeover Numbers

The Comcast purchase of Sky places a value of over £30bn on the company, in this blind auction process which was overseen by the UK’s Takeover Panel. The Comcast Chairman and Chief Executive commented that it was “a great day for Comcast“.

Sky recommended shareholders accept the bid as it “represents materially superior value“.

In the UK, Sky has 23mn subscribers and its rights to show Premier League football mean that it’s one of the most profitable TV companies in Europe.

Fox Bid

Comcast’s rival in the auction was 21st Century Fox, which bid £15.67 per share. Fox already owns 39% of Sky and it seemed on the cards they would succeed in their bid.

A number of regulatory concerns and issues have been raised as a result of the sale of Sky and the influence Fox owner, Rupert Murdoch, already has on the UK’s media.

However, Brian Roberts, the Chairman and Chief Executive of Comcast, stated:

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 now encourage Sky shareholders to accept our offer, which we look forward to completing before the end of October 2018.”

Comcast Global Reach

Comcast already owns NBC Universal and is the largest provider of cable in the United States. Following the takeover of Sky, the company will be the largest provider of pay TV in the world, with approximately 52mn customers globally.

Chief Executive of Sky, Jeremy Darroch, commented:

This is the beginning of the next exciting chapter for Sky. Brian and his team have built a great business and we are looking forward to bringing our two companies together for the benefit of our customers and colleagues. As part of a broader Comcast we believe we will be able to continue to grow and strengthen our position as Europe’s leading direct to consumer media company“.

Choppy Water Ahead?

While the deal seems done and dusted at this stage, with so many twists and turns already, it is unlikely that the next 12 months will be straight forward for Sky. Any potential regulatory investigation, or shareholder revolt, could see sudden volatility impact the current valuation. There may still be further trading opportunities yet.

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