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Why Did Comcast Delay Its Formal Bid for Sky?

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Comcast and Fox vying for control of Sky

After Comcast (CMCSA) lost the race to acquire the majority of 21st Century Fox’s (FOX) (FOXA) operations, the two companies have found themselves competing for control of European pay-TV group Sky PLC. Fox already owns 39.0% of Sky, and it’s seeking to take full ownership of the company by acquiring the remaining 61.0% stake in Sky that it doesn’t already own.

Comcast is also interested in acquiring Sky. In February, Comcast launched an informal bid for Sky in which it proposed to acquire the company for roughly $31.0 billion—about 16.0% higher than Fox’s offer of ~$25.8 billion.

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Comcast reportedly delayed formal bid for strategic reasons

However, it took Comcast a few months to formalize its bid for Sky. Comcast’s delay in formalizing its bid for Sky was a strategy. First, Comcast appeared to hope that it could persuade Fox to enter a deal in which it would acquire the majority of Fox’s assets.

Last summer, Fox bypassed Verizon (VZ) and Comcast to strike a deal with Disney (DIS), which agreed to buy the bulk of its operations for $52.4 billion. However, that deal hasn’t closed, and Comcast appears to believe it could reverse it. The deal Fox struck with Disney included the sale of its 39.0% stake in Sky.

It appears that Comcast has delayed formalizing its bid for Sky for regulatory reasons. Fox’s bid for Sky has faced a lengthy regulatory review, with a British watchdog recommending that the bid be blocked because it isn’t in the best interest of the public.

Guarding against digital disruption

Sky owns lucrative sports rights, which could be a strategic asset for traditional media companies looking to respond to the disruption for digital media providers. For example, Netflix (NFLX) has a global reach of 125.0 million subscribers.

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