Fox has been in a more than year-long fight with regulators in the U.K. to secure approval for its effort to buy out the remaining 61% of Sky that it does not already own. The Sky platform is a key asset that was a big part of the motivation for Disney’s $52.4 billion acquisition of major 21st Century Fox assets. Disney had been counting on Fox completing its $15 billion Sky transaction, or at least hanging on to the roughly 40% that it has long controlled.
Comcast tried to parry with Disney in the hunt for the 21st Century Fox assets late last year but were mostly rebuffed by Fox. Rumors surfaced earlier this month the Comcast was considering unveiling another higher offer for the assets Disney hopes to acquire, or that it would take a run at Sky.
At the close of trading Tuesday, Comcast shares were down 7.4% to the $36.66. Disney fell 4.5% to hover around $104.87 while Fox ebbed 3.3% to the $37.14 range. In the U.K., the news sent Sky shares soaring.
Comcast’s offer for all of Sky puts immediate pressure on Fox to raise the acquisition price first reached with Sky brass in December 2016. The prospect of a battle for control of Sky could also complicate the closing of the Disney-Fox deal. Fox issued only a terse statement Tuesday in response to Comcast’s rival bid, saying it remained “committed to its recommended cash offer for Sky announced on 15th December 2016. We note that no firm offer has been made by Comcast at this point.”
Wall Street initial reaction to Comcast’s move was mixed. Craig Moffett, of MoffettNathanson, questioned why Comcast would make such a big play for a satellite platform given the limitations of its ability to offer two-way interactivity with subscribers.
“The bad (news) is that the underlying technology here is satellite, and Comcast will have to twist themselves into knots to explain why satellite distribution won’t be just as obsolete in Europe as it already is in the U.S.,” Moffett wrote in a research note. “Notably, the word ‘satellite’ never even appears in the investor presentation that accompanies this morning’s conference call, almost as if they are hoping no one notices.”
Moffett also observed that the Sky bid does not rule out Comcast trying to stir up a bidding war with Disney for the other Fox assets.
“The notion that Comcast might make a topping bid for Fox has weighed heavily on Comcast shares, which have entirely missed the market rebound in the days since their continued interest was first reported,” he wrote.