Sky shares leaped to an 18-year high yesterday as investors bet that a transatlantic battle for the TV group had further to run after Comcast’s $34bn (€29bn) bid trumped an offer from Rupert Murdoch made just hours earlier.
Comcast, the world’s biggest entertainment group, said it had the backing of Sky’s independent directors for a £14.75 per-share offer that came 16 hours after Murdoch’s 21st Century Fox bid £14. The speed with which Comcast’s Brian Roberts counterbid shows how determined he is to buy Sky, a broadcaster of sports, films and TV shows to 23 million homes across Europe. Sky’s shares rose to £15.45 as investors bet the bidders would have to pay more to secure victory.
“You need a finale at the end of a great bull market and I think Sky is going to be that finale,” said Crispin Odey, a top 20 Sky shareholder, noting the share’s rapid ascent. “It’s got legs,” he said. Sky’s shares are up 95% since Fox made its first bid in 2016, and have risen 55% in the last year.
The fight is part of a bigger battle being waged in the entertainment industry as the growth of Netflix and Amazon force the world’s traditional media giants to spend tens of billions of dollar to keep pace. Comcast and Walt Disney are locked in a separate $70bn-plus battle to buy most of Fox’s assets, including Sky, and Disney is backing Murdoch in his pursuit of the UK firm.
Murdoch owns 39% of Sky, which he helped to launch. The standoff pits the industry’s biggest names against each other, with Roberts, the Murdoch family and Disney’s Bob Iger engaged in a multibillion-dollar game of chess to reshape the global entertainment business.
The three are at a tech conference in Sun Valley, Idaho. Roberts’s Comcast tried and failed to buy Disney in 2004. Analysts are divided as to who will win.
Jeff Wlodarczak at Pivotal Research Group said Comcast may succeed in winning Sky but lose out on Fox to Disney. Richard Greenfield at BTIG said, however, he thought Disney needed to buy Sky to secure a direct relationship with customers in Europe so it could sell them its vast range of programming. “Is Disney willing to let Sky go? Or will they crush Comcast on both continents?” Greenfield said.
“We continue to believe if Comcast really wants to own Sky, their best way to do it is by acquiring the Fox assets — winner-takes-all was always the scenario that appeared most likely to us.” Fox investors vote on Disney’s $71bn bid on July 27. Comcast, which made a $65bn all-cash offer for the Fox assets last month only for Disney to raise its bid, would need to return before that date if it wants to try again.