Comcast Won the Bidding for Sky — What Is It and What Benefits Does It Offer?
Comcast won the bidding war for Sky in September 2018. The deal should boost Comcast’s international revenue and user count. What are the benefits?
Sky is a leading media and entertainment company in Europe. The company was added Comcast Corporation's assets in 2018 following of a three-round auction held by the United Kingdom’s Panel on Takeovers and Mergers.
Comcast bid nearly $40 billion for 61 percent of the U.K. broadcaster. Comcast beat the bid Rupert Murdoch's mass media company, Fox Corporation, submitted. At the time, Fox and Disney had already owned a percentage of Sky and wanted to buy the remaining shares.
Then, on Sept. 26, Fox and the Walt Disney Disney Company (DIS) decided to sell their Sky shares to Comcast, valuing Fox’s 39 percent stake at 11.6 billion pounds (or $15.3 billion). After the completion of the acquisition of Fox’s 39 percent, Comcast gained 75 percent of Sky’s share of capital.
Read on to learn about what Sky does and why some are suggesting that Comcast hold a spinoff in 2023.
What does Sky do?
Sky is a leader of pay-TV services in the United Kingdom, as well as other regional markets such as Germany and Italy. It operates in five countries and has about 23 million active users across Europe. The purchase allowed Comcast to gain a global footprint to add to its efforts to expand in international markets.
The Sky deal was expected to boost Comcast’s international revenue to 25 percent from the 9 percent it had been generating outside the United States. Comcast believed the deal would be accretive to its cash flow in the first year of completion.
The addition of Sky could increase Comcast’s customer base from the more than 32 million it has to over 50 million customers in the United States and the European Union.
It gives Comcast original TV productions such as Babylon Berlin and Britannia, as well as premier sporting channels, the ability to compete with digital rivals Netflix and Amazon, which have been investing billions in original content and programming to attract traditional cable subscribers.
Now TV, Sky’s video-streaming business, will also compete with Netflix around the globe.
What services does Sky offer?
Sky is an all-in-one service provider. From TV streaming to cell phone service, Sky offers it all. Additionally, customers can also purchase broadband internet from Sky.
In October 2021, Sky launched Sky Glass, a TV that doesn’t require a dish or connectivity box. Sky Glass is sold in different sizes — 43-inch, 55-inch, or 65-inch, and allows users to access the various Sky channels, among other streaming services.
Will Comcast spinoff Sky?
Comcast hasn't announced any plans to spinoff Sky, though sources like Reuters are suggesting that it should. In addition to questioning its current performance, Reuters noted in a piece published in January 2023 that Comcast might want to spinoff Sky “while it’s still in decent shape."
Not only did the media giant pay "two and a half times the company’s enterprise value before the takeover battle began," but it also "took a non-cash impairment charge of $8.6 billion related to Sky" in October 2022, Reuters pointed out.