LONDON -- Comcast formally unveiled a $31 billion takeover bid for Sky on Wednesday, putting the U.S. cable giant squarely in a battle with Rupert Murdoch's 21st Century Fox for control over the British satellite broadcaster. The total price with debt would be about $40 billion.
The terms of the long-awaited proposal were good enough to prompt Sky to withdraw its recommendation for Fox's $16 billion bid for the 61 percent of Sky that it does not already own.
What may follow is a battle for Sky, a broadcaster whose 23 million customers stretch across significant parts of Europe. It also owns the lucrative broadcast rights to the English Premier League and other professional sports competitions. Such is its value that Robert Iger, chief executive of the Walt Disney Co., has called it "a real crown jewel."
For Comcast, buying Sky would accelerate its international expansion plans and give its NBCUniversal arm a more global platform. It would also complicate Fox's plan to sell the bulk of its businesses to Disney for $52.4 billion. Comcast had made a bid for Fox properties that was 16 percent higher than Disney's on a per-share basis, but that proposal was rebuffed, partly because Comcast refused to offer protections in the event of regulatory rejection.
For Murdoch, buying the 61 percent of Sky that Fox does not currently own would give his company full control of a strongly performing business to which the media mogul has a special attachment. He founded the broadcaster in the early 1990s and had previously tried to buy the entire company, only to be forced to withdraw his bid in the wake of a British phone-hacking scandal involving one of his tabloids.
Comcast's move, telegraphed two months ago, seizes upon Fox's troubles in getting government approval for its bid, which was announced in late 2016. British regulators have questioned whether buying Sky, which operates the 24-hour news channel Sky News, would give Murdoch too much control over the country's news media, given his ownership of newspapers like The Times of London and The Sun.
It also changes the calculus for Fox and Disney. Both have already offered concessions to allay regulators' concerns, including an offer to sell Sky News to Disney.
But now they may be forced to pay up to win Sky.
Under the terms of its offer, Comcast would pay $17.45 in cash for each Sky share. Fox has offered about $15 a share.
Hoping to press on Fox's weak spot, Comcast said it was committed to Sky News' editorial independence, offering to set up a board for the news unit and maintain its funding. Comcast also repeated pledges to increase investment in Britain's film and television industries.
"We will invest to grow and enhance Sky's business and be a strong steward of its valuable brand," Brian L. Roberts, Comcast's chairman and chief executive, said in a statement. "Sky is a great British business -- with us, that's the way it will always be."
Disney did not immediately respond to a request for comment.
In a statement, Fox said it remained committed to its takeover offer and was considering its options. It could raise its offer, which would likely require Disney's consent. Or it could do nothing and hold onto its 39 percent stake, potentially putting it in an uneasy alliance with Comcast if its rival's offer goes through.
While Sky withdrew its recommendation for Fox's bid, it is not clear if it will formally back either Comcast or Fox. That may depend in part on how regulators rule on either bid. Britain's competition regulator is expected to offer its recommendation on Fox's bid by Tuesday. A final decision, by the country's culture secretary, is expected by mid-June.
Meanwhile, Comcast reported in its first-quarter earnings release that it lost 96,000 Xfinity TV customers in the quarter, a sharp contrast to the 42,000 it added a year ago.
Comcast added 379,000 high-speed Internet customers as it inexorably shifts away from TV distribution and into what it calls a "connectivity" business.
Revenue was $22.8 billion in the quarter compared with $20.6 billion in the year-ago period. The Super Bowl and the Winter Olympics -- both televised by NBC -- raised Comcast Corp.'s first-quarter revenue by 10.7 percent even as telecom competition and the "cord-cutting" trend ate into its television customer base, the company said Wednesday.
Information for this article was contributed by Bob Fernandez of The Philadelphia Inquirer.
Business on 04/26/2018