EU Clears Comcast's Bid for Sky

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Sky

The European Commission gives the U.S. cable giant the green light after having also cleared 21st Century Fox in 2017 to complete a deal.

U.S. cable giant and NBCUniversal owner Comcast has received European Union clearance for its £22 billion ($30.7 billion) takeover bid for European pay-TV giant Sky.

The review by the European Commission, the executive body of the EU, focused on antitrust — meaning competition — issues.

"Based on the results of its market investigation, the commission concluded that the proposed transaction would raise no competition concerns," the EC said. "Comcast and Sky are mainly active in different markets in Austria, Germany, Ireland, Italy, the U.K. and Spain. They compete with each other only to a limited extent, mainly in the acquisition of TV content and in the wholesale supply of basic pay-TV channels."

It added: "The commission found that the proposed transaction would lead to only a limited increase in Sky's existing share of the markets for the acquisition of TV content, as well as in the market for the wholesale supply of TV channels in the relevant member states."

The independent committee of Sky's board said it "welcomes today's announcement by the European Commission of its decision to approve unconditionally Comcast's proposed acquisition of Sky under the EU merger regulation." It added that Comcast "has until Friday [July 13] to post its offer document to Sky shareholders," concluding: "A further announcement will be made as and when appropriate."

The Comcast offer, made official April 25, trumped 21st Century Fox, which holds a 39 percent stake in the company and made a late-2016 offer for full ownership of Sky. Fox is controlled by the Murdoch family and could make a sweetened bid for Sky.

NBCUniversal's parent company made an all-cash offer for £12.50 a share, which is a 16 percent premium to Fox's bid of £10.75 a share. 

Comcast said it anticipates $500 million in revenue and cost synergies, and highlighted that it intends to make the following commitments regarding Sky and investment in the U.K.: 1) maintain annual expenditure in Sky News for 10 years, "at a level not less than incurred in Sky’s 2017 financial year" 2) establish an editorial Sky News board with the responsibility to ensure the editorial independence of Sky News for 10 years 3) maintain Sky’s U.K. headquarters in Osterley for five years and 4)
"[N]ot acquire any majority interest in U.K. newspapers for five years."

Additionally, Comcast made several "statements of intention," which include: "continue to support the creative industries in the U.K. and increase investment in U.K. film and TV production; support innovation in the U.K. by continuing to support Sky’s technology hub in Leeds; continue to support young people in the U.K. by maintaining Sky’s Software Engineering Academy scheme; and continue to support Sky’s local community sports programs in the U.K."

A deal for Sky would expand Comcast’s international footprint to "more effectively compete in the rapidly changing and intensely competitive entertainment and communications landscape," the cable giant said. 

Fox has long owned a 39 percent stake in Sky and offered to buy the remaining 61 percent in December 2016. Its bid has been dogged by a long-running regulatory review in Britain. 

Just before Disney unveiled its $52.4 billion takeover deal for various entertainment businesses of Fox in December, Comcast had also been looking to make an offer for much of Fox, but bowed out, saying it never got a full chance in the process. But earlier this week, it unveiled a $65 billion offer for the same parts of Fox that Disney had agreed to buy.