Comcast beats out Fox in auction for broadcaster Sky

Comcast and Fox battle for Sky

Comcast and Fox battle for Sky

US firm Comcast had originally tabled a £26 billion, £14.75 a share bid for Sky, while Fox's offer for the 61% of the United Kingdom broadcaster it does not already own valued it at £24.5 billion at £14 a share.

USA cable giant Comcast scored a big win in the scramble for media assets by beating Rupert Murdoch, and his backer Disney, in the battle for Sky with an eye-watering $40 billion bid. As part of the auction, Comcast announced that it will acquire the entire issued and to be issued share capital of Sky with an offer price of £17.28 (~$22.57) per share.

Rupert Murdoch's Fox, which handled the bidding for Disney, offered about $35 billion or $20.63 a share. Since Fox made its first bid almost two years ago, it has agreed to sell a major chunk of its business - including its existing 39% Sky stake - to United States entertainment behemoth Walt Disney.

It is also a setback for U.S. entertainment giant Walt Disney, which agreed a separate $71bn deal to buy the bulk of Fox's film and TV assets, including the Sky stake, in June and would have taken ownership of the British broadcaster following a successful Fox takeover.

Comcast operates a more integrated model in the U.S. which includes cable broadband, telephony and free to air television along certain parts of the East Coast.

Then in July, Disney muscled Comcast aside with a $71-billion deal for Fox that brought it franchises such as the X-Men and hit shows like The Simpsons.

In a statement, Sky recommended that shareholders accept Comcast's offer and sell their shares immediately. A victory over Fox, however, won't be sealed unless Sky investors tender their shares by an 11 October deadline.

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"Sky is a wonderful company with a great platform, tremendous brand and accomplished management team", Comcast boss Brian Roberts said in a statement.

"I tell you what folks, he didn't want to buy the controlling stakes of Sky News". With Sky, the Philadelphia-based company would deliver TV services to 52 million customers in the USA as well as European countries such as UK, Italy and Germany, and add sought-after programming such as the rights to Premier League English soccer. It has been boosting its investment in original TV productions such as 1920s sex-and-crime saga Babylon Berlin and Britannia, a period drama about the Roman conquest of Britain.

Netflix, meanwhile, has relied on other companies' broadband networks to distribute its lavish in-house productions and expand its global subscriber base to 130 million.

But by paying such a general price for a satellite television business like, which itself is prey to the disruptive forces of the video streaming services, Comcast looks to the increasing its exposure to a model already under threat.

The process has been complicated by Disney's deal to buy most of Fox's assets, which is due to be completed next year if approved by global regulators. "Comcast found Sky attractive because it provides a foothold in Europe and will make it less dependent on the United States".

But Sky shareholders still have the option of backing the Disney-Fox offer. The first was thwarted in 2011 by a phone-tapping scandal at his United Kingdom newspaper business.

Comcast's $34 billion bid had been the top offer so far.

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