May 20, 2019

In Beating Disney for Sky, Comcast Remains in the Game

Indeed, the most stinging loss may belong to the Murdoch family, which has been fighting for control of Sky for the better part of a decade. Mr. Murdoch, 87, co-founded the satellite TV company in 1989 to compete with the British Broadcasting Corporation. Sky, which has 31,000 employees and generated about $17 billion in revenue last year, ranks as one of the most popular TV brands in Europe. It creates its own original shows, runs an influential news channel and has exclusive partnerships in Europe with HBO, Showtime and Warner Bros.

After losing out to Disney in the battle for 21st Century Fox, getting Sky became an imperative for Comcast. It was, by some measures, the only way for the Philadelphia-based cable company to stay squarely in a media game now dominated by supertankers like Disney-Fox and ATT, which recently completed its $85.4 billion takeover of Time Warner.

Mr. Roberts and his advisers began looking at Sky as an acquisition as early as July 2017, long before engaging in the bidding war against Disney for 21st Century Fox assets. Fox’s 39 percent stake in Sky was the primary reason that Mr. Roberts went after the company, according to two people familiar with the matter who spoke on the condition of anonymity to discuss internal strategy.

For Comcast, pursuing Fox was always about building its international businesses. Mr. Roberts cared much less about other assets that the Murdoch family was selling, including the FX and National Geographic cable networks. Cable companies like Comcast, which primarily operates in the United States, have grappled with a decline in pay-TV subscribers who have flocked to streaming services like Netflix. Mr. Roberts, who fashions himself as his company’s principal dealmaker, identified Sky as one way to keep Comcast growing.

He was particularly taken with Sky’s technology. The British broadcaster sells a set-top box that streams its programming over a broadband connection and includes apps like Netflix or Spotify. Sky built the technology to become its key engine for delivering programming, a setup similar to Comcast’s Xfinity program.

Sky also owns valuable sports rights, including a large chunk of the English Premier League. That was seen as a nice fit with Comcast since its NBCUniversal division owns the American rights to those matches. In addition to sports, the deal gives Comcast some Disney and Fox content. Sky owns streaming rights to films from both studios for the European markets in which it operates for the next two to three years.

The British government supervised the weekend auction for Sky, which involved three rounds of blind bidding. Going into the process, analysts like Amy Yong of Macquarie Research put the chances for each side to succeed at 50-50. Commentators on Twitter debated whether the better moniker was SkyBattle or BattleSky.

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