Disney-Fox to sell Sky stake to Comcast
Move gives US media group £11.6bn and smooths sale of broadcaster
Walt Disney and 21st Century Fox are selling their shares in Sky to Comcast, putting the US cable operator on course to take full control of the European media group.
Fox holds a 39 per cent stake in Sky, which would go to Disney as part of Disney’s $71bn purchase of Rupert Murdoch’s entertainment assets.
However, after Comcast beat Disney in the £37bn auction for Sky on Saturday evening, Disney has decided to sell up rather than remain as a minority shareholder.
Fox confirmed on Wednesday that it would tender the shares in the Comcast offer. The proceeds will flow to Disney as part of its purchase of the Fox assets.
Disney plans to use the proceeds from the sale — about £11.6bn ($15.3bn) — to strengthen its balance sheet, reduce the debt associated with its purchase of the Fox assets and invest in content creation.
The company is developing new, global direct-to-consumer streaming services and is planning to produce exclusive content for them. Disney will take control of Hulu, the US streaming service, as part of its acquisition of the Fox assets, and will develop new content for it to attract new subscribers. It has launched ESPN Plus, a sports streaming service, and plans to launch a service aimed at families which will include content produced by its Marvel, Pixar and Lucasfilm divisions.
The sale of the Fox-Disney stake in Sky will push Comcast over the acceptance threshold for its offer, meaning that the company can begin working with Sky. If they had held on to the stake, they could have prevented Comcast from consolidating Sky’s cash flow, although the US cable company would still have controlled the broadcaster.
At the weekend, Comcast agreed to pay £17.28 a share for Sky, £30.6bn in equity and $37bn including net debt, trumping Fox and Disney’s rival bid.
Brian Roberts, Comcast’s chief executive, told the FT this week that Sky would operate independently once it completed the acquisition, with Jeremy Darroch, its chief executive, given autonomy to run the business.
“The consistent theme at Comcast has been letting leaders of our businesses make their own decisions, being decentralised and keeping an entrepreneurial spirit,” Mr Roberts said. “We’ve said this to Jeremy and the rest of the Sky team . . . They will be able to act as an independent company but with the resources of a $150bn company behind them.”
Sky ushered in the pay-TV era in the UK when it was launched almost 30 years ago by Rupert Murdoch on “a wing and a prayer” from a draughty industrial park on the outskirts of west London.
Its early financial troubles almost bankrupted the media mogul. But eventually, its mix of exclusive sports rights and movies, and later additions such as broadband and mobile services, turned it into one of Britain’s most valuable companies.