U.S. media giant Comcast announced Tuesday it was making a proposed cash offer to buy Sky for 22.1 billion pounds ($31 billion), rivaling Rupert Murdoch’s Fox to take over the pay-TV group.
Comcast, which owns NBC and Universal Pictures, said it was offering 12.50 pounds per share. That proposal is significantly higher than the 10.75 pounds per share agreed by Fox.
“We think Sky is an outstanding company. It has 23 million customers and leading positions in the U.K., Italy, and Germany,” said Brian L. Roberts, chairman and CEO of Comcast Corporation, in a statement.
“Sky has been a consistent innovator in its use of technology to deliver a fantastic viewing experience and has a proud record of investment in news and programming. It has great people and a very strong and capable management team.”
U.K.-listed shares of Sky surged more than 18 percent shortly after the opening bell on Tuesday morning.
Roberts added that the U.K. will remain a great place to do business and said Comcast intends to use Sky as a platform for the company’s growth in Europe.
“We intend to maintain and enhance Sky’s business. Adding Sky to the Comcast family of businesses will increase our international revenues from 9 percent to 25 percent. We believe that there are significant opportunities for growth by combining these businesses,” he said.
Comcast’s proposed offer pits the biggest cable operator in the U.S. against Murdoch’s 21st Century Fox. However,Disney has agreed to buy a string of assets from Fox — including its current 39 percent share of Sky — making the picture more complicated.
Fox had already agreed on a deal of 18.5 billion pounds to buy the 61 percent stake in the U.K.-based broadcasting group it does not currently own. But last month, the U.K.’s competition authority provisionally found Fox’s bid for Sky would not be in the public interest.
The Competition and Markets Authority (CMA) cited concerns the Murdoch Family Trust would have too much influence over public opinion and the political agenda if the deal went through. It added that spinning off or divesting Sky News, insulating Sky News from Fox’s influence, or blocking the deal outright would be possible solutions to its concerns. However, if the acquisition by Disney goes through, that could lessen the Murdoch family’s influence in the U.K. and possibly placate the regulator.
Sky declined to comment when contacted by CNBC.
Alex De Groote, digital and media analyst at Cenkos Securities, said Comcast’s “opportunistic” bid would likely spark a “fully-blown auction.”
When asked whether Comcast’s offer seemed a somewhat generous improvement from Fox’s, De Groote replied: “(Sky) have just won the Premier League (soccer) rights for another three years. They are performing well operationally. They’re performing well in Germany and Italy … I could see this stock price going way north of 12.50 (pounds) and counter approaches coming both from Fox and maybe even a third party.”
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.
