What's going on?
After bids, counterbids and counter-counterbids, Comcast beat 21st Century Fox to acquire British broadcaster Sky on Saturday for $39 billion (tweet this).
What does this mean?
Comcast made the highest bid for Sky in a rare auction process, seemingly because UK regulators were frustrated with the back and forth – with neither side making its best and final offer.
Though Comcast came out on top, it’s only buying 61% of Sky. The other 39% is owned by runner-up, Fox – which, in turn, is owned by Disney (after the Magic Kingdom beat Comcast to the punch). So it could lead to awkward conversations around the dinner table. Or in the boardroom.
Why should I care?
The bigger picture: Content’s importance is constant.
Having content that resonates with all ages is of paramount (😉) importance to media companies as they compete with online streaming services like YouTube and Netflix (along with the latter’s blockbuster budget for original shows and films). Comcast will likely benefit from a healthy cash flow from Sky’s 23 million subscribers across Europe (which will also help it to expand internationally). It’ll probably also beef up its content library in order to stem the flow of cord-cutting #millennials – as telecoms company AT&T did when acquiring Time Warner in June.
For markets: The deal’s been a long time coming.
A share of Sky was worth $20.72 on Friday – more than the previous highest takeover offer of $19.28 per share. Investors expected Sky would ultimately sell for more than the previous high offer, but weren’t anticipating Comcast splashing $22.59 per share. It’s a significant jump from Fox’s $14.05 offer in December 2016, which sparked the battle of the bids – and it highlights the growing importance of owning content as well as the pipes it’s delivered through.