• Reuters, Bloomberg

  • SHARE

Comcast beat Rupert Murdoch’s Twenty-First Century Fox in the battle for Sky on Saturday after offering £30.6 billion ($40 billion) in a dramatic auction to decide the fate of the pay-television group.

The U.S. cable giant bid £17.28 a share for control of London-listed Sky, bettering a £15.67-a-share offer by Fox, Britain’s Takeover Panel said.

Buying Sky will make Philadelphia-based Comcast, which owns the NBC network and Universal Pictures, the world’s largest pay-TV operator, with around 52 million customers.

Chairman and chief executive Brian Roberts has had his eye on Sky as a way to help counter declines in subscribers for traditional cable TV in its core U.S. market as viewers switch to video-on-demand services like Netflix and Amazon .

“This is a great day for Comcast,” he said. “This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally.”

Buying Sky allows Roberts to expand the content and distribution model he has embraced since taking control of NBCUniversal seven years ago. With Sky, the Philadelphia-based company would deliver TV services to 52 million customers in the U.S. as well as European countries such as U.K., Italy and Germany, and would add sought-after programming such as the rights to Premier League English soccer.

Sky also has original TV productions, such as the 1920s sex-and-crime saga “Babylon Berlin” and “Britannia,” a period drama about the Roman conquest of Britain.

Netflix, meanwhile, has relied on other companies’ broadband networks to distribute its lavish in-house productions and expand its global subscriber base to 130 million.

Crucially for Comcast, Sky has a growing video-streaming business.

Comcast’s knock-out offer thwarted Murdoch’s long-held ambition to win control of Sky. It is also a setback for U.S. entertainment giant Walt Disney, which would have likely been its ultimate owner.

Disney has agreed on a separate $71 billion deal to buy most of Fox’s film and TV assets, including its existing 39 percent stake in Sky, and would have taken full ownership after a successful Fox takeover.

Comcast’s final offer was a jump on its bid going into the auction of £14.75, and compares with Sky’s closing price of £15.85 on Friday.

Comcast believed it needed to deliver a knock-out blow given that Fox’s existing stake in Sky gave it a chance of victory if it was a close second to Comcast, two sources said.

Its final offer — more than double Sky’s share price before Fox made its approach in December 2016 — quickly won the backing of Sky’s independent directors on Saturday.

“We are recommending it, as it represents materially superior value,” said Martin Gilbert, chairman of Sky’s independent committee. “We are focused on drawing this process to a successful and swift close and therefore urge shareholders to accept the recommended Comcast offer.”

Fox noted the recommendation, saying it was considering options for its 39 percent stake and would make another announcement in due course.

“Sky is a remarkable story, and we are proud to have played such a significant role in building the incredible value reflected today in Comcast’s offer,” Fox said.

Fox’s holding, which Comcast’s offer values at more than $15 billion, stems from Murdoch’s role in the creation of the company nearly three decades ago.

His younger son James was pivotal in building Sky into Europe’s leading pay-TV operator as its former chief executive and current chairman.

Comcast, which requires 50 percent plus one share of Sky’s equity to win control, said it was also seeking to buy Sky shares in the market.

One fund manager who holds Sky shares said nobody could complain about the Comcast price. “The question now is if Fox actually sells out and if not can Comcast get to 50 percent,” he said.

One banker involved in the auction said, “Did Comcast pay a lot more than they needed to?”

Sources familiar with the matter said Fox, Disney and Comcast had not been in discussions about the 39 percent stake.

The auction was a dramatic climax to a trans-Atlantic bidding battle waged since February, when Comcast gate-crashed Fox’s takeover of Sky.

It is a blow to 87-year-old Murdoch, who tried to buy Sky eight years ago only for the bid to collapse in the fallout from a phone-hacking scandal at his British newspaper business.

Some politicians have opposed a deal, citing concerns about the influence Murdoch would wield over the U.K.’s news agenda.

Fox made a string of concessions to assuage those worries and land a company that serves 23 million households in Britain, Ireland, Germany, Austria and Italy.

Sky’s chief executive Jeremy Darroch said Comcast’s victory was the beginning of a new chapter. “Sky has never stood still, and with Comcast our momentum will only increase,” he said.

RELATED PHOTOS

Coronavirus banner