Fox Challenged by Comcast in a Bid for Sky

By Joyce Yu

Philadelphia, PA–Comcast raised its cash offer for Sky to $34 billion, higher than Twenty-First Century Fox’s latest bid of about $32.5 billion, moving the battle for Fox asset across the Atlantic.

A leader in pay TV in the United Kingdom and other markets including Germany and Italy, Sky brings value to its owner with edge to compete with the likes of Netflix and Amazon in Europe. In December 2016, Fox had originally reached a deal to buy the part of Sky it does not already own but faced roadblocks when the deal was first proposed. U.K. regulators expressed concerns that the merger would give Rupert Murdoch, the owner of Fox, too much control over British television and newspapers. But just today, Fox’s proposal has been cleared by the UK government.

Sky has been a key asset in a much larger battle between Comcast and Disney for most of Fox. Disney has agreed to take ownership of Sky if it succeeds in acquiring Fox. With Comcast raising its stakes in direct competition with Fox for Sky, the former might be backing down in its bid for Fox. Stocks of Comcast rose 1.8% on Wednesday morning but Fox dipped 0.7%.

Now the battle for Sky has been further escalated, something that Fox might not be happy to see, especially when the company is expecting a loss on World Cup. Without a U.S. team, early World Cup rounds on Fox’s networks drew nearly a third fewer viewers than in 2014, with viewership averaging 2.6 million through the quarterfinals, down about 32% from the 2014 tournament. Early start times for games also played a part in hurting the ratings. The 2014 tournament was in Brazil, a much more convenient time zone than Russia this year for U.S. viewers. Fox is now expected to lose money on the 2018 tournament, people familiar with the situation told the Wall Street Journal.

After selling off its entertainment assets to either Walt Disney Co. or Comcast Corp, Fox plans to focus even more on sport. In 2011, the company paid a big price tag of $425 million for English-language rights to the World Cup and other FIFA properties, outbidding ESPN. Reports said ESPN had paid $100 million in the previous FIFA deal. Fox will spend some $900 million on soccer rights through the 2026 World Cup.