The fight for control of Sky may be over. But the war between Comcast and Disney to rule the streaming airwaves in Europe — and beyond — has only just begun.

The two media titans have been engaged in corporate combat for nearly a year as they sparred over the spoils of Rupert Murdoch’s 21st Century Fox film and TV empire. On Sept. 22, Comcast prevailed in the contest for Sky, which was decided in a highly unusual blind auction ordered by a British regulatory panel because the bidding between Comcast and Fox (with backing from Disney) had been so intense — and so deadlocked.

Comcast’s $40 billion final bid was 17% higher than its previous offer for Sky in July and a whopping 38% greater than its first proposal in February — testament to the cable giant’s determination to win the European pay-TV provider after Disney got its hands on the 20th Century Fox studio, FX Networks, National Geographic Partners, Star India and other Fox assets. Sky, a separate publicly traded entity, was in play as part of the process because Fox owns 39% of Sky and had been trying since December 2016 to buy out the remaining shares.

Disney had hoped that Fox would wrap up that acquisition by the time Disney’s $71.3 billion purchase of the Fox assets was completed (now expected by early next year). But that was before Comcast barreled into the fray with unsolicited counteroffers for both Fox and Sky.

With Sky’s fate now likely decided — shareholders still have till Oct. 11 to decide whether to accept Comcast’s offer — the next skirmish in Comcast versus Disney will be over the sale of all or part of the 39% stake in Sky that Disney will inherit. At a time of rapid change on the media landscape, neither Disney nor Comcast has much incentive to remain a minority owner of a company controlled by a rival. But just as Comcast will be eager to wrest the remaining piece of Sky away from Disney, Disney has its eye on Comcast’s 30% stake in Hulu. With Sky out of the picture, Hulu’s importance to Disney as architecture for its streaming ambitions has shot up.

Comcast was a winner on Saturday but took a beating on Monday when Wall Street weighed in with reactions to the deal. The consensus among top analysts was that the conglomerate got caught up in the chase and overpaid for an asset with an uncertain future, like other traditional MVPDs. Comcast shares fell 6% in trading Sept. 24.

“Disney looks like a winner by losing,” MoffettNathanson analyst Craig Moffett wrote in a research note. “Assuming that Comcast buys the 39% stake from Fox, the high price paid by Comcast for Sky will improve the metrics of the Disney-Fox transaction.”

More than any other U.S. media conglomerates, Comcast and Disney are engaged in direct warfare in the TV, film and theme park businesses. And it’s no secret that Disney chief Bob Iger and Comcast chairman-CEO Brian Roberts have a history of frosty relations.

Both companies are in the throes of re-engineering their content operations to embrace the new model of direct-to-consumer streaming that has made Netflix such a global industry force in just a few years. The 21st Century Fox assets are a big prize that will greatly enable Disney to feed its planned suite of streaming services with new and vintage content.

“Disney looks like a winner by losing.”
Craig Moffett, analyst

Sky was seen as a vital piece of the puzzle for both companies because of its 23 million subscribers in the U.K., Ireland, Germany, Italy and Austria. Sky is a highly profitable business — a crucial consideration at a time when the M&A spree is adding tens of billions of dollars of debt to Comcast and Disney’s balance sheets. It’s also an important diversification play for Comcast, as its business is still overwhelmingly domestic, with only 9% of its total revenue coming from outside the U.S. With Sky, the international component of its total revenue base will rise to about 25%.

Negotiations between Comcast and Disney about a sale or swap of stakes in Sky and Hulu and potentially other assets should be fierce, given the offensives that both have unleashed in the past year.

But perhaps the biggest winner and most influential figure in all of this back-and-forth is neither Iger nor Roberts but Murdoch. He has no doubt enjoyed the spectacle of two media giants scrapping over 21st Century Fox and Sky in bidding wars that significantly drove up the final purchase price of both assets. As the media industry transforms, the baron of Fox looks ever-more prescient for having invested much more than his peers in international markets, particularly Europe, Latin America and Asia.

Murdoch will emerge from the battle royal with billions added to his personal war chest, and he’ll be in the catbird seat as Disney’s single largest individual shareholder. “A masterstroke,” a senior Disney executive said, admiringly, of Murdoch after the auction results were disclosed.