uploads///Comcast residential video customer net additions

Comcast Is Selling Bonds to Fund the Sky Acquisition

By

Oct. 10 2018, Published 7:50 a.m. ET

Bonds to fund the acquisition

As of October 2, Comcast (CMCSA) has sold unsecured bonds worth $27 billion to finance its $38.8 billion purchase of 61% of Sky. The debt sale marks the second-largest US deal in 2018 after CVS Health’s (CVS) bond issuance of $40 billion in March. Comcast’s deal was also the fourth-largest debt sale in the United States after Verizon (VZ), Anheuser-Busch InBev, and CVS.

According to the Financial Times, Comcast sold $27 billion of bonds in 12 parts of floating and fixed bonds with maturities of two to 40 years. The bonds were priced at 4.71%, which was 150 basis points above the Treasury rate.

Article continues below advertisement

Comcast to get full control of Sky

After a 21-month bidding war with Twenty-First Century Fox (FOXA), Comcast was declared the winner of 61% of Sky at a London auction last month with a bid of $39 billion. Sky is London’s largest satellite broadcaster. Shortly after the auction, Fox, which is on track to sell most of its media and entertainment assets to the Walt Disney Company (DIS), decided to relinquish its 39% stake in Sky to Comcast, thus giving Comcast full control of Sky.

Sky’s full ownership could help Comcast revive growth in its pay-TV business since Sky is a leader of pay-TV services in the United Kingdom and other regional markets such as Germany and Italy. The acquisition of Sky would boost its revenues and customer base and strengthen it to compete with digital rivals.

Like all cable and pay-TV companies, Comcast has been losing a significant number of video customers due to cord-cutting. In the second quarter of 2018, it lost 136,000 residential video customers compared to 45,000 in the second quarter of 2017.

Advertisement

More From Market Realist