A potential snag in the Disney/Fox buyout deal has presented itself, now that Comcast has made a cash bid to takeover British broadcasting giant, Sky. Comcast has offered $31 billion for the 61% of Sky not currently owned by Fox.
A significant reason for the large acquisition of Fox by Disney, outside of control of other Marvel properties and Avatar, was its international presence through Sky. Fox had previously made overtures to take complete control of the satellite broadcaster, most recently in 2016 for $16 billion. Fox had hoped to have completed the Sky buy ahead of the Disney deal. With Comcast’s nearly doubling the going rate for Sky, Fox is faced with the decision of either significantly increasing its own bid or relenting - forcing a re-working of the Disney deal in the process.
The New York Times has detailed the intertwined histories of the companies involved - as Comcast at one point had wanted to buy the assets that Fox is now selling to Disney. The Times, too, describes the lengthy and tumultuous history of Fox’s attempts at gaining total control of Sky. The Fox phone hacking scandal squashed Fox’s initial bid in 2011, and a combination of sexual misconduct allegations and a fear of Rupert Murdoch’s company having too much media influence in Britain (they already own and operate the widely read newspapers The Times of London and The Sun) have caused the 2016 overtures for Sky to be provisionally rejected by government regulators in late January.
Sky currently has a very large footprint in Britain, and is in the process of bringing their offerings to both Spain and Switzerland in the near future as a streaming service. As media companies begin to merge and fold up into giant conglomerations in order to combat the recent emergence of tech companies like Amazon, Apple, and Google in the entertainment and media spheres, international reach has become all the more important. Comcast, the largest cable provider in the United States, is especially vulnerable to the “cord-cutting” that’s run rampant with the increasing profile of Amazon and Netflix as viable alternatives to traditional cable. This has caused dramatically increasing prices for the broadcast rights of sports; seen as the last true way of forcing people to watch live television. That Sky owns the rights to the wildly popular English Premier League (Britain’s professional soccer league) is not a coincidence; and has likely led to the dwarfing of Fox’s offerings for the broadcaster.
Regardless of the eventual owner of Sky, Comcast’s bid for the satellite company will force the Disney/Fox deal to take a different shape. It is yet to be determined if Comcast or Disney would be okay with being partners in Sky, with Disney taking over Fox’s 39 percent share. Should Disney relinquish the move for Sky, which Disney’s Bob Iger recently referred to as a “crown jewel” of the agreement, it will likely free up billions of dollars that can then be spent on integrating Fox’s properties into the Disney superstructure. Given the money at stake, it could even mean Fox-centric additions to Disney parks in the near future. The increase in cost to acquire Sky will also trickle down to the perceived values of broadcasting other sporting leagues, and cause the media rights to those to increase significantly.
Source: New York Times