Comcast clinches Sky deal

US media conglomerate Comcast has emerged victorious in the battle for broadcaster Sky in a blind auction overseen by the UK’s Takeover Panel.

915_MW_P09_Shares_Bottom

775159596

"No wonder there's a market for Uber," says Alistair Osborne in the Times. "Some poor American tourist took a black cab round London and ended up with a £30bn bill." Comcast's boss Brian Roberts's (pictured) £30bn purchase of Sky implies a price of £17.28 per share, which represents a 125% premium. Comcast's shares slipped by 6% on the news due to fears that he had "grossly overpaid", as research group MoffettNathanson told the Times. The US media conglomerate secured its prize in a blind auction overseen by the UK's Takeover Panel. It outbid Rupert Murdoch's 21st Century Fox, which already owns 39% of the British satellite television broadcaster. Fox, backed by Disney, bid just £15.67 a share.

"Why did Comcast want Sky so badly?" asks Amol Rajan on the BBC. "Because it is desperate and Sky is too juicy to ignore." The context here is the "mad scramble for eyeballs in an industry ripped asunder by technology giants such as Netflix and Amazon." Sky's 27 million subscribers and sports content look highly appealing.

Meanwhile, there's an interesting lesson here, says Nils Pratley in the Guardian. Back in 2016, Sky's independent directors judged that "outside shareholders should be grateful the Murdochs had showed up with an offer of £10.75". At the time, the stockmarket was "gloomy on Sky" and its share price sunk to 769p. Nor had Sky won the next collection of Premier League rights. Comcast hadn't turned up yet to offer a counterbid. This shows that "boards should not always be dazzled by the superficial attraction of a bid at 40% above the market price. Sometimes it's better to wait for more a lot more".

Recommended

Too embarrassed to ask: what is short selling?
Too embarrassed to ask

Too embarrassed to ask: what is short selling?

Short sellers are often accused of unfairly driving share prices down to make a quick buck. But short selling is a perfectly legitimate – if risky – t…
26 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Three clean energy stocks for your portfolio
Share tips

Three clean energy stocks for your portfolio

Professional investor Christian Roessing of the Pictet Clean Energy Fund highlights of his three favourite stocks at the forefront of the clean energy…
25 Jan 2021
The MoneyWeek Podcast: let's talk about bubbles
Stockmarkets

The MoneyWeek Podcast: let's talk about bubbles

Merryn and John talk about the many obvious signs of a bubble in certain assets, including tech stocks, TikTok, and stock-trading 12-year olds. It's c…
22 Jan 2021

Most Popular

The FTSE 100 is set for a makeover with an influx of new tech stocks
UK stockmarkets

The FTSE 100 is set for a makeover with an influx of new tech stocks

The FTSE 100 – the dullest index in the world – is about to reinvent itself as a host of new firms list on the market. The change is long overdue, say…
24 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021