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Why Are Fox, Disney, and Comcast Battling for Sky?

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Sky plc is a desired asset

The UK-based Sky provides sports programming, film, and broadband services to nearly 23 million people across Britain, Ireland, Germany, Italy, and Austria. Sky is a desirable asset for Comcast (CMCSA), which is struggling to boost its customer base amid a declining pay-TV business. 21st Century Fox (FOXA) and Walt Disney (DIS) are also showing interest in the London-based Sky to boost their portfolios.

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Comcast’s offer of $30 billion

In February, US cable operator Comcast made a surprise offer of 12.50 British pounds per share, or nearly 22.0 billion pounds (or $30 billion), to buy a 61% stake in the European pay-TV group Sky. Comcast’s offer for a 61% stake in Sky stunned the industry. The offer was around 16.3% higher than Fox’s offer of 10.75 pounds per share. Comcast has formally notified Brussels of its bid for Sky, and the deal is currently undergoing the regulatory process.

Fox currently owns 39% of Sky and is looking to buy the remaining 61%. Disney is expected to gain access to 39% of Sky if its deal to acquire Fox’s assets is approved. However, if Comcast happens to crush Disney’s deal with Fox’s assets with its latest hostile bid and gets approval for its 61% stake in Sky, Comcast would gain 100% ownership of Sky.

Comcast looks to revive its business

Comcast has been struggling to boost its customer base amid rising demand for online streaming video providers such as Netflix (NFLX) and Amazon (AMZN). As you can see from the chart above, Comcast has seen video customer losses over the past four consecutive quarters. The acquisition of Sky is expected to help revive growth in its pay-TV business. Further, the deal is expected to turn around Comcast’s business and generate significant revenues.

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