The billionaire egos behind Comcast’s bid for Sky
Is Brian Roberts getting his revenge?
The Comcast CEO just announced a $31 billion bid for the British broadcaster Sky, directly challenging two of his fellow media moguls, Rupert Murdoch and Bob Iger.
The move comes just a few months after Murdoch spurned Roberts’ offer to buy most of 21st Century Fox. A Comcast-Fox combination was intriguing. But Murdoch struck a deal with Disney’s Iger instead.
Now Roberts is back with an offer for Sky that can’t be ignored.
Comcast, of course, says this isn’t personal at all. The company is telling investors that the deal will “extend Comcast’s international footprint” and fuel “growth investments.”
And all of that makes sense on paper. But think about the players here. These men, who have known each other for decades, are vying for global growth opportunities. Some billionaire-size egos are involved.
These media CEOs are in a constant state of competition, as measured by market cap, network ratings, number of vacation homes and other metrics.
And Roberts’ all-cash offer for Sky complicates both Murdoch’s pending takeover of Sky and Iger’s pursuit of the Fox assets.
Sky is attractive because it beams valuable TV programming to tens of millions of viewers in the UK, Germany, Italy and other countries.
Another media chief, David Zaslav of Discovery Communications, said Tuesday that “Comcast and Brian coming in, and making a move on Sky,” is part of an industry-wide effort to grow outside the U.S.
“There’s going to be a race to try and be more global,” Zaslav told investors.
That’s why a bidding war for Sky is likely.
Comcast’s sweet revenge?
Roberts’ low-key nature belies his empire-building ambitions. In 2004, he made a failed bid to buy Disney. Five years later he launched a successful takeover of NBCUniversal.
Comcast, through NBC, is among the biggest media companies in the United States and among the biggest TV and broadband providers in the US, too.
But it barely has a presence outside the US, and Roberts wants to change that. International businesses are just 9% of Comcast’s revenues, and all of it is from NBCUniversal’s channels and theme parks. With a Sky takeover, that rate shoots up to 25%. Sky could be a launchpad for further expansion plans.
It could also be a finger in the eye of Murdoch, the 21st Century Fox patriarch.
Murdoch already owns 39% of Sky, and he has been trying for years to buy the rest. His current proposal is tangled up with British regulators.
While Murdoch been trying to get the deal done, the 86-year-old has also been thinking about the future of his media empire. Late last year, he held talks with both Roberts and Iger about selling most of Fox, including the existing 39% stake in Sky.
According to the Wall Street Journal, Comcast made the more lucrative offer — a bid “in the low-$60 billions range” — but Fox went with Disney’s offer of $52.4 billion in stock.
Fox reportedly had serious concerns that a deal with Comcast would be rejected by regulators.
Whatever the reasons, Murdoch chose Iger and vice versa. The deal was announced in December. So this is an obvious source of tension between the media titans.
When the Disney-Fox deal was announced, some Comcast observers had flashbacks to 2004 and Roberts’ attempt to buy Disney. More recently, he proposed a merger with Time Warner Cable in 2014, only to see it smothered by the aforementioned regulators.
After a year of merger planning, Comcast abandoned the bid in 2015, and Charter swooped in to buy Time Warner Cable.
With Time Warner Cable, Comcast would have inherited millions of homes with television subscriptions. Comcast is now seeking something similar, but in Europe instead of the US
Roberts was in London on Tuesday for the surprise announcement. He told reporters that he was impressed by Sky’s technology while he was on a trip to London last November.
At a Sky retail store, he and a colleague “spent at least an hour going through every feature and comparing it to our own,” Roberts told The Guardian newspaper. “We were really terribly impressed.”
Speaking with the Journal, Roberts talked about his growth ambitions for Comcast more generally.
“In a world where you’re getting into competition with Amazon, Google and Facebook, having scale” is important, he said.