Comcast Wins Bid for Sky But Shares Drop Anyway

While Comcast just scored a big victory against Rupert Murdoch’s Fox in winning ownership of European pay-TV operator Sky, traders were not celebrating. The stock lost about 8% in Monday trading on the news.

Pending Sky shareholder approval, Comcast will be paying £17.28 (about $22.70) in cash per Sky share. This comes to roughly a $40 billion total. The company won in a bidding war over the weekend against 21st Century Fox, who owns 39% of Sky.

It was a one-day bidding process that involved three rounds with sources familiar with the matter remarking that bids in round one and two were “significantly lower.”

In a statement after the auction, Fox said that it is “considering its options regarding its own 39 percent shareholding in Sky and will make a further announcement in due course. Sky is a remarkable story, and we are proud to have played such a significant role in building the incredible value reflected today in Comcast’s offer.”

Comcast stated that it is “pleased with the outcome of the auction and is excited by the opportunities that a combination of Sky and Comcast will bring to shareholders and consumers.”

Comcast’s chairman and chief executive officer, Brian L. Roberts, had said, “We now encourage Sky shareholders to accept our offer, which we look forward to completing before the end of October 2018.” Roberts believes Sky is a “unique asset.”

“Attention now quickly turns to integration with minimal impact on the business. However, you have to expect some cost cutting measures,” said Paolo Pescatore, an independent tech, media and telecoms analyst who wrote to CNBC.

“There are significant growth opportunities in Europe. The combined entity will be a considerable force,” he added.

“Sky and its customers will benefit from being part of the wider group, access to more services, products and features, financial security to some extent to bid for key costly premium content rights — in particular sports which is arguably the company’s prized asset with the Premier League,” he concluded.

Disclaimer: We have no position in Comcast Corporation (NASDAQ: CMCSA) nor Twenty-First Century Fox, Inc. (NASDAQ: FOX) and have not been compensated for this article.