Through the lens: Management at Sky has recommended that its shareholders ’immediately’ accept the Comcast bid. Picture: REUTERS
Through the lens: Management at Sky has recommended that its shareholders ’immediately’ accept the Comcast bid. Picture: REUTERS

London — Shares in UK broadcaster Sky soared on Monday after US cable giant Comcast outgunned Rupert Murdoch’s 21st Century Fox in a dramatic auction for the pan-European TV operator.

In midday deals, Sky shares surged 8.68% to £17.22 on London’s falling FTSE 100 index, after Comcast successfully bid £30.6bn, or £17.28 per share, in a blind auction held on Saturday.

Fox, which already owns 39% of Sky, had offered £15.67 per share to value the total group at £27.6bn.

Management at Sky has recommended that its shareholders "immediately" accept the Comcast bid, which it described as "an excellent outcome".

The heart-stopping auction drama was the climax to a long-running battle for control of Europe’s biggest pay-TV provider.

'Popping the champagne'

Interactive Investor analyst Rebecca O’Keeffe said: "Sky shareholders are popping the champagne after this weekend’s bidding auction valued the company at eye-watering levels."

The takeover tussle comes as global players such as Comcast and 21st Century Fox grapple with a fast-changing television landscape and intense competition from online streaming giants Amazon and Netflix.

"The premium that is being offered by Comcast is indicative of how much pressure is on traditional media platforms," O’Keeffe added.

"Their newer, tech-savvy rivals have revolutionised the way people engage with TV and internet content."

Sky broadcasts blockbuster films and drama including cult US series Game of Thrones, and has lucrative rights to English Premier League football.

The London-listed group, which has a subscription base of 23-million, is widely regarded as one of Europe’s most profitable and powerful TV companies.

Comcast regarded Sky as a way to win a foothold in Europe and end its sole dependence on the US at a time when many consumers there are cord-cutting or trimming their television packages to save cash.

"For Comcast the prospect of gaining Sky’s 23-million customers and instantly picking up assets across several large European markets was very tempting," said analyst Ian Forrest at The Share Centre.

"As a cable television operator in the US facing rising competition from Netflix and Amazon, it provides them with an attractive overseas business with potential to expand further in Europe."

The weekend auction all but settled a titanic battle between the two media empires, but the Comcast bid remains subject to shareholder approval.

Comcast was forced to drop a separate bid to take over Fox itself because it needed the money to go after Sky. This allowed Walt Disney to complete a megamerger with Fox that should close next year.

Saturday’s auction therefore turned into a proxy battle between Comcast and Disney for Sky.

For Disney, the acquisition of Sky would have provided a way to feed its content directly to viewers without having to rely on cable providers.

"The bidding war is over and the biggest winners in all of this are Sky shareholders," said analyst Neil Wilson.

"The £17.28 offer from Comcast delivered the requisite knockout blow. It had always been the case that Sky meant more to Comcast than it would to Disney/Fox."