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Comcast Nails Down $27 Billion Deal for Sky

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Sky to boost Comcast’s international push

Comcast (CMCSA) has secured $27 billion to fund its purchase of British broadcaster Sky. Comcast offered to acquire Sky for roughly $40 billion following a rare auction process pitting it against the combined forces of 21st Century Fox (FOX) and the Walt Disney Company (DIS).

Comcast fought long and hard to acquire Sky because it views the asset as crucial to its international expansion. Sky serves ~23 million pay-TV customers across several European countries. It also sells broadband and mobile phone services and owns the broadcasting rights to lucrative sports content. Sky also runs a production house that churns out original shows.

Comcast’s adding Sky to its family of businesses is expected to raise its international revenue to 25% of its total revenue from the current 9.0%.

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Strong interest in Comcast bonds

Comcast sold bonds to raise the $27 billion it needed to fund the Sky deal. The offering drew strong interest from debt investors, prompting the company to raise it by $7.0 billion from the initially marketed amount, the Financial Times reported.

According to Bloomberg, Comcast saved ~$27.8 million in annual interest payments by simply timing its bond sale well.

Comcast posted $3.2 billion profit

Although Comcast’s outstanding debt is set to rise to over $100 billion following the latest bond sale, the company is still expected to maintain a favorable credit rating, which should make its future borrowing easy. Traditional media companies such as Comcast have taken to acquisitions to counter the growing competitive threat from technology companies such as Netflix.

Comcast generated $21.7 billion in revenue and made $3.2 billion in profit in the second quarter. It’s expected to post $21.8 billion in revenue in the third quarter. DISH Network (DISH) and Charter Communications (CHTR) reported second-quarter profits of $438.7 million and $273 million, respectively.

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