$ 38 billion deal and its implications: how Comcast and Disney are struggling with Amazon and Netflix
Image: Mike Mozart | CC BY 2.0 The
American telecommunications conglomerate Comcast won the auction for the purchase of telecommunications company Sky plc for $ 38 billion. The competitor to Comcast was 21st Century Fox Inc., a Disney-owned company. Comcast shareholders are not happy about this victory. Many of them believe that the company's investment strategy will make it harder to deal with the main threat - Amazon and Netflix.
Comcast managed to win the auction by offering £ 17.28 ($ 22.65) per share of Sky Telecom holding. 21st Century Fox Inc. was ready to offer only £ 15.67 per share. As a result, the proposed Comcast price was $ 38 billion.
An interesting moment - in July, Comcast tried to buy 21st Century Fox itself, then Disney, which paid $ 71 billion, bypassed the company. Disney also claimed Sky, but this time Comcast managed to win the auction . The deal has not yet been completed officially - Sky owners must make a decision to sell before October 11.
In 2018, Comcast management adopted a new strategy for the development of a media holding. Its main element was the expansion outside the United States, which is why interest in Sky (23 million paying TV subscribers) arose, and before that the Indian channel Star India was bought.
What Dislike Investors Comcast
Despite winning a race with Disney, Comcast investors were unhappy with the outcome of the auction. They believe that the company has significantly overpaid for a new asset. In particular, in December 2016, Disney offered for Sky almost two times less. As a result, after the announcement of the purchase of shares Sky increased in price by 8.6%, and the value of the shares of Comcast itself at auction in New York fell by 7%.
In addition, some analysts have expressed doubts about the feasibility of buying for a huge amount of a telecom company whose main business areas, such as satellite television, may be at risk due to the development of technology.
Hulu vs Sky: two strategies for survival
Comcast's deal with Sky creates an interesting collision, reflecting different approaches to the development of telecommunications services. Disney-controlled company Fox, which fought Comcast during the auction, already owns a 39% stake in Sky.
After losing the auction, the company is likely to sell its share - Fox representatives promised to tell about the next steps in the near future. Analysts believe that Disney's proceeds can invest in the development of another of its assets - the Hulu streaming service. The conflict here is that Comcast has a share in Hulu (30%).
Thus, for the successful development of Sky and Hulu, Disney and Comcast can make a kind of "exchange", completely giving the assets to each other.
The main competitors of companies like Disney and Comcast in recent years have become services Netflix and Amazon, developing online streaming platforms and creating their own content. The deal between Comcast and Sky can show which strategy to counter the telecommunications giants of the new wave will be more promising - the development of their streaming platforms (Hulu) or the purchase of traditional broadcasting players with popular TV products - for example, one of the flagship products of Sky is the English Premier League football championship .
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