Comcast launches US$31 bln bid for Sky, taking on Fox

Comcast Taps Tulchan in Bid for Sky

Sky's independent directors have withdrawn their support for a deal for 21st Century Fox to buy the British company, setting the scene for a possible bidding war. Minutes later, Fox said it's committed to its own Sky bid and is considering options.

As part of its post-offer assurances, Comcast confirmed plans to establish a Sky News board, which will be maintained for at least 10 years, as well as promising annual expenditure on Sky News will be at least equal to that of the past financial year.

"We also understand the role that Sky plays in United Kingdom society and in its customers' lives and we are determined to be responsible and trusted owners of Sky", Roberts said.

Shares of Comcast went up by almost 3% on Wednesday already reaching a high of $34.78 after closing on Tuesday at $33.35. "We have long believed Sky is an outstanding company and a great fit with Comcast".

"With its 23 million retail customers, leading positions in the UK, Italy, and Germany, and its history of strong financial performance, we see significant opportunities for growth by combining our businesses".

Accompanying its offer, Comcast made a number of commitments on how it will run Sky, many of which match pledges previously made by Fox.

The company laid out a strategy that showed it was interested in being a good corporate citizen in Britain, promising to use Sky as a platform for growth in Europe, maintaining Sky's United Kingdom headquarters and using the acquisition to "expand Comcast's global footprint".

"Disney Chief Executive Officer Bob Iger, who called Sky a "crown jewel" when Disney announced its offer for Fox in December, now needs to decide how badly he wants to outdo Comcast for Sky and back a higher bid from Fox".

Sky News has become a flash point in the Fox's bid due to competition fears centring on Mr Murdoch's ownership of The Sun, The Times and The Sunday Times newspapers.

But British regulators aren't so keen on allowing Murdoch to buy the company, which would give him too much control of the United Kingdom media and is therefore "not in the public interest", the Competition and Markets Authority said earlier this year.

Comcast stock rose 3% TO $34.34, while 21CF rose 2% to $36.78 in United States trading. Generously add those to consensus estimates for Sky's operating profit in 2020, tax the lot at 18 percent, and the return on invested capital is nearly 7 percent.

The Philadelphia-based owner of NBCUniversal, says the addition of Sky's customer base will enable it to invest in more original and acquired programming.

"The rights may come with multibillion-pound price tags, but Sky has proven the Premier League deals are well worth the outlay".

Whether Sky goes for it is the next question.

"The group looks on course to deliver operating profits of £1.5bn this year, double what it earned 10years ago". "As a result of the announcement of this higher cash offer, the Independent Committee is withdrawing its recommendation of [Fox's] offer", they said in a statement. It will also establish a Sky News editorial board to ensure the channel's independence, keep the United Kingdom headquarters in Osterley for five years and not acquire any majority interest in British newspapers for five years.

That is because Comcast has a minimal United Kingdom media market presence.

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