Comcast has made a firm cash offer for Sky that values the pay TV operator at £22 billion (€25 billion), with a commitment to maintain annual expenditure on Sky News for at least 10 years and to establish an independent editorial board for the channel.
The announcement, which accompanied Comcast’s Q1 results, puts the US cable and media group in a head-to-head battle with 21st Century Fox, whose existing bid for the company values it at £19 billion.
Comcast’s bid would see Sky shareholders receive £12.50 in cash for each Sky share. In addition, Sky shareholders shall be entitled to receive any final dividend in respect of Sky’s financial year ended June 30, 2018, up to an amount of 21.8 pence per Sky share
The bid, which will be financed by additional debt, is subject to regulatory approval and the support of over 50% of the voting rights of Sky shareholders. 21st Century Fox currently holds a 39% stake in the operator.
Comcast chairman and CEO Brian Roberts said the company had set an acceptance condition of 50% plus one share, and that he hoped Sky’s independent directors would recommend the proposal.
Roberts said he did not see any material issues with securing regulatory approval for the deal.
“We know that Sky is very important to the UK, and we respect that as this and part of our proposal today, we are making a number of intention statements: one, we will maintain Sky’s UK headquarters at the Osterley campus, which is amazing; two, we will continue to support Sky as a leader in content creation, arts, culture and entertainment; three, we have tremendous respect for Sky News and its strong track record for high-quality editorial and journalistic independence, we will fully maintain that; four, we will continue to support Sky’s technology hub in Leeds; five, we will maintain Sky’s Software Engineering Academy; and six, we will continue Sky’s local community programmes,” said Roberts in an investor call.
Roberts said that Comcast had “admired Sky for a long time”, that the pay TV operator was “an outstanding business” and that there were “strong strategic benefits in combining Sky with Comcast”.
He said that the European market was highly attractive and that the acquisition would “create a leading platform for growth”, combining Comcast’s 29 million US customers with Sky’s 23 million across the UK, Ireland, Germany, Austria and Italy.
Roberts said the combination would “fuel our ability to invest even further in innovation and drive more compelling financial returns”. The acquisition of Sky, he said, would increase the proportion of Comcast’s revenues from outside the US from 9% to 25%.