One of 🇬🇧 U.K.'s longest takeover battle heads into crunch time: 21st Century Fox and Comcast are being forced into a settlement auction by British regulators, in order to settle their transatlantic battle for the 📡 satellite broadcaster Sky.
Sky PLC’s stock nearly doubled since Fox first agreed to buy out the remaining stake of the Pan-European pay-TV group (69%) it not already owned. 📈 The agreed-upon price of £10.75 per share implied a 35% premium back in December 2016. Since then, both Fox (@ £10.75, later increased to £14.00) and Comcast (@ £14.75) received the recommendations to shareholders by Sky’s independent directors to accept their respective bids – resulting in a virtual deadlock.
But what does make the London-based company so appealing to the 🇺🇸 U.S. broadcasters? I took an in-depth look at the group's financial results, subscriber growth, and recent cost-cutting moves (i.e. conceding sports rights). 🧐
Important takeaway: Despite increased competition from digital-only players (e.g. DAZN, Eleven Sports, Amazon) and dropping rights to lower their expenses in several markets, one place you won’t find Sky cutting costs is with domestic ⚽️soccer rights. These are not only the most expensive, but the only ones which can reliably drive subscriptions and guarantee a relevant product in the consumer’s view.
Bottom Line: In Europe, pretty much all other sports are relegated to niche status compared to ‘King Football.’ Rights to the premier domestic leagues have been secured by Sky's three divisions until at least the summer of 2021 - making Disney/Fox and Comcast executives confident about the long-term prospects for the European pay-TV group.
Another major factor for Sky's appeal: Being a content distribution platform in Europe for the respective film and movie studios (i.e. Walt Disney Studios, 20th Century Fox, Universal Pictures).
