Behind Comcast’s Rising Debt Levels after Sky Acquisition

Comcast faces debt pressure

As of September 30, Comcast (CMCSA) had long-term debt of $69.7 billion, higher than the $59.4 billion the company had on December 31, 2017. The company has sold unsecured bonds worth $27 billion to finance its $38.8 billion acquisition of the 61% stake in Sky. According to Bloomberg, Comcast’s debt borrowing would raise the company’s debt levels to the $100 billion debt level. Comcast’s debt level is expected to reach $114 billion.

Behind Comcast’s Rising Debt Levels after Sky Acquisition

Comcast’s Sky deal

Last month, Comcast gained control over London’s leading broadcaster, Sky, after winning the bid against 21st Century Fox (FOXA). Comcast’s offer of 17.28 pounds per share was better than Fox’s offer of 15.67 pounds per share. Fox and Walt Disney (DIS) also agreed to sell their 39% stake in Sky to Comcast, thus ending the long-standing takeover battle. Comcast now has complete control of Sky after purchasing 36.9% of the outstanding Sky stock.

Comcast’s Sky acquisition makes the company the world’s largest broadcaster with more than 53 million customers in over five countries across the US as well as Europe (EFA). Sky has nearly 23 million pay-TV subscribers across Europe and thus would give a chance to Comcast to expand internationally. The Sky deal is therefore expected to fuel Comcast’s international revenue.

Further, after the Sky deal, Comcast is expected to get original TV production shows as well as premier sporting properties to compete with digital rivals like Netflix and Amazon, which are attracting traditional cable subscribers with lower video entertainment prices.