What's going on?
Comcast, the American telecom and media giant, swooped in on Tuesday with a bid for Sky (which is kind of a British version of itself) – possibly throwing a wrench in Disney’s planned takeover of Fox…
What does this mean?
Let’s back up a bit. Sky is a major European media player that’s 39% owned by 21st Century Fox. Fox has spent the past year or so trying to buy the other 61% of Sky (its bid has been held up by UK regulators due to competition concerns). However, Fox recently agreed to sell itself to Disney – which means that Sky, or at least 39% of it, will eventually be owned by Disney if that deal goes through. Enter Comcast, which wants Sky for itself. Got it?
Like Comcast, Sky owns cable TV channels, produces media content and provides wireless internet. The deal would give Comcast a way to drastically grow its overseas business, as well as access to more content that it can sell to American viewers.
Why should I care?
For markets: Sky’s shareholders were the big winners on Tuesday… Comcast’s, not so much (tweet this).
Comcast says it will pay £12.50 per share for Sky, significantly more than the £10.75 that Fox has agreed to pay. But Sky’s shares closed on Tuesday at £13.30, suggesting investors think a bidding war will ensue for control of Sky. On the other channel, Comcast’s shares fell almost 6% – suggesting investors don’t love the risk brought on by an expensive European acquisition.
The bigger picture: Investors are asking how this will affect Disney’s deal to acquire Fox.
While Sky may be attractive to Disney, it seems unlikely that Disney’s desire to buy Fox was heavily predicated on getting control of Sky – and so this new wrinkle shouldn’t change anything. There’s also still the chance that Comcast makes a counter-bid for Fox, which would really throw the cat among the pigeons… stay tuned!