NBCUniversal parent company Comcast has launched a £22 billion (approximately US$31 billion) takeover bid for European satcaster Sky that pits the U.S. cable company against its previous suitor, Rupert Murdoch’s 21st Century Fox.
21st Century Fox made its offer in December of 2016 to purchase the 61% of the European pay TV giant that it didn’t already own. The Comcast offer stands at £12.50 per share, as per its initial notice of a potential offer in late February. That offer is reportedly 16% higher than what Fox had put forward, at £10.75 per share. As a result of the higher offer, Sky said that it has withdrawn its recommendation to its shareholders of the 21st Century Fox bid, and is terminating its Co-operation Agreement with 21st Century Fox, entered on the date of the Fox offer.
The Fox offer had faced hurdles last year when the UK’s Secretary of State for Culture, Media and Sport issued a European intervention notice, which asked UK media regulator Ofcom to report on two public interest considerations around the merger plans.
In a move to address those concerns, the Comcast offer states the U.S. company’s intention to not acquire a majority interest in any newspapers in the UK for five years, and the establishment of a Sky News board that will ensure the editorial independence of Sky News for a 10-year period. The offer also establishes Comcast’s intent to maintain Sky’s UK headquarters at its Osterly campus.
In addition, Comcast says it will continue to support Sky’s technology hub in Leeds, and “continue to support the creative industries in the UK and increase investment in UK film and TV production.”
Stating that it expects the acquisition to generate revenue and cost synergies in the neighborhood of $500 million, Comcast anticipates that the acquisition should close before the end of 2018, subject to approvals.
“We are delighted to be formalizing our offer for Sky today,” said Comcast chairman and CEO Brian Roberts (pictured) in a statement. “We have long believed Sky is an outstanding company and a great fit with Comcast. Sky has a strong business, excellent customer loyalty, and a valued brand. It is led by a terrific management team who we look forward to working with to build and grow this business.
“With its 23 million retail customers, leading positions in the UK, Italy, and Germany, and its history of strong financial performance, we see significant opportunities for growth by combining our businesses,” he added. “Sky is a highly complementary business and will expand Comcast’s international footprint in the UK and Continental Europe. Sky will be our platform for growth across Europe. The combined customer base of approximately 52 million will allow us to invest more in original and acquired programming and more in innovation as we strive to deliver a truly differentiated customer experience. We look forward to receiving the necessary regulatory approvals.”
For its part, 21st Century Fox also issued a statement regarding the announcement on Wednesday, in which it maintained that the company is “committed to its recommended cash offer for Sky announced on 15th December 2016 and is currently considering its options. A further announcement will be made in due course.”
The news comes as Comcast released its financials for Q1 of 2018, boasting a 10.7% increase in consolidated revenue, a 3.6% increase in revenue for the Cable Communications division, and a 21.3% increase in revenues for NBCUniversal, driven by the broadcast of the PyeongChang Olympics and the Super Bowl.