For so long the media puppet master, Rupert Murdoch is finding out what it feels like being at the mercy of events. US media giant Comcast has threatened to crash his Sky and Disney deal party, setting up the mother of all bid battles. Big egos, big money, big business, and the future of broadcasting in Britain. This one has it all.
Comcast’s £22bn bid for Sky will trigger a huge payout for the Murdoch family one way or another. But the decision on who’s going to provide the parenting for a company he’s long seen as his baby is not his to make.
It must be all the more galling for him that it has happened thanks to the UK regulatory authorities. The buck passing and procrastinating engaged in by OfCom, the Competition & Markets Authority, the Department for Culture Media & Sport, opened the door for Comcast.
While they were dithering, Sky managed to get its hands on lion’s share of Premiership football for 14 per cent less than it paid last time after mending fences with rival BT.
More to the point, it has shown off some sparkling results, underlining why Comcast CEO Brian Roberts is so keen to play footsie. Against a backdrop of rapidly changing viewer habits, Sky has proved adept enough to change its business model and keep its customers on board. It has, in fact, been adding to their number.
It has increased the options available for viewers who want access to its content, with everything from Now TV at the bottom to an all singing, all dancing ultra HD service at the top. Sky has even recently mooted getting rid of its beloved satellite dishes. In a streaming world it has proved nimble enough enough to keep pace with the rapid change going on around it.
It is now very clear that Mr Murdoch’s original bid, which coincided with the shares entering the period of weakness, grossly undervalued the company. The price Comcast is proposing reflects that.
Mr Roberts says he doesn’t think the regulators will pose any problems for him, and he’s probably right. The NBCUniversal owner makes less than 10 per cent of its earnings internationally. There aren’t any issues of media plurality to grapple with. There wouldn’t appear to be anything for the competition authorities to concern themselves with either.
Politicians? Mr Roberts cooed lots of sweet nothings, and made a non binding promise to maintain Sky’s headquarters and the loss making Sky News. That should just about do it. It doesn’t take all that much to buy off the flag waving nationalists in the British Government these days, as long as you’re not European.
As things stand his bid – 16 per cent higher than Fox’s at £12.50 a share – should be enough to get him to 50 per cent even with Mr Murdoch’s 39 per cent shareholding. The sort of people who’ve been smartly stake building in Sky of late, hedge funds, activists and other clever investors, aren’t the types of leave money on the table.
But it’s not a knock out. Not yet.
What matters now is what Disney boss Bob Iger things about it all.
His deal to buy the lion’s share of Mr Murdoch’s Fox included Sky.
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Throwing a spanner in the works of that represents a wonderful additional prize for Mr Roberts given that it’s a party he wanted to be a part of only to be turned aside by the bouncers at the front door. Mr Iger must now be spitting tacks. The market thinks he’s going to respond. It’s probably right and not just because of a bruised ego.
With Sky’s enviable position in the UK and Europe he can’t sit idly by while his rival pinches all those customers out from under his nose.
So settle down for a bare knuckle slugfest between the two men, with Mr Murdoch reduced to sitting in punchin’ Bob Iger’s corner. It should make for one of the best shows in business.