Comcast on Saturday won an auction to purchase Sky, the UK-based media and telecom company, with a $40 billion bid that topped an offer from 21st Century Fox. Sky on Monday recommended that its shareholders accept the offer from Comcast before a deadline of October 11.
"This is a great day for Comcast," Comcast CEO Brian Roberts said in an announcement. "This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally."
"Craig Moffett, an analyst at MoffettNathanson LLC, downgraded Comcast's stock Monday to neutral, saying the company had 'grossly overpaid for Sky,'" Bloomberg wrote. "Timothy Horan, an analyst at Oppenheimer, also downgraded Comcast's stock, citing the company's need to invest instead in the US, where it faces growing competition from wireless and online TV rivals."
Comcast expands programming properties
Comcast and other US-based telecoms have been racing to expand media and programming assets as they seek to compete against streaming services such as Netflix and gain more control over the content distributed on their broadband networks and TV services. Comcast already owns NBCUniversal and nine regional sports networks in the US.
Sky has a similar presence in Europe as Comcast does in the US, with ownership of both programming and telecom services. "Sky serves 23 million customers in seven countries—UK, Ireland, Germany, Austria, Italy, Spain, and Switzerland," Comcast said in a fact sheet. "From exclusive partnerships with HBO and Showtime to English Premier League soccer, and to Sky's own original programming, Sky offers a broad range of quality content for European viewers."
Sky's revenue in 2017 was $18.5 billion. Subsidiary Sky Broadband is the second biggest residential Internet provider in the UK after BT.
Comcast's victory over Fox came two months after it was outbid by Disney in an attempt to buy 21st Century Fox properties. Disney is now on track to complete its purchase of Fox next year after the spinoff of major assets such as Fox News Channel, Fox Business Network, and Fox Broadcasting Company.
Fox already owns 39 percent of Sky, but Comcast would end up as Sky's majority owner if it completes the purchase.