I have been waiting to a RNS confirming that written offer by Comcast has been made to SKY. Have I have missed it? The Senior Independent Director had previously said that they are duty bound to consider it and then accept/reject it. If they recommend it, the offer from Murdoch would lapse, unless Murdoch decides to increase the offer previously made.
Can anybody throw some light on whether Comcast Offer has been received by Sky? And if so, what is the Independent Directors' recommendation?
Today we have announced a new partnership to bundle the full Netflix service into a brand-new Sky TV subscription pack. This pioneering partnership will give millions of Sky customers seamless access to Netflix through the Sky Q platform.
We will make the extensive Netflix service available to new and existing customers by creating a brand-new and attractively priced entertainment TV pack, combining Sky and Netflix content side by side for the first time.
With the Netflix app integrated into Sky Q, and Netflix programmes promoted alongside Sky content, customers can enjoy shows such as Britannia, Billions and Big Little Lies alongside The Crown, Stranger Things and Black Mirror, as well as free to air TV, all on the Sky platform. At the same time, customer will enjoy the simplicity of one monthly bill and easy to use integrated user interface.
As part of the new partnership, Sky customers will be able to seamlessly access Netflix content in the Sky Q menu, plus quickly find their favourite Netflix programmes including the use of Sky Qs search and voice search functionality. Existing Netflix customers will be able to easily migrate their account to the new Sky TV bundle, or sign into the Netflix app using their existing account details, to enjoy Netflix with even greater convenience.
Jeremy Darroch, Group CEO, told [email protected]:
The exciting new features coming to Sky Q will enable Sky customers to access even more of the best entertainment delivered over the best product platform. By placing Sky and Netflix content side-by-side, along with programmes from the likes of HBO, Showtime, Fox and Disney, we are making the entertainment experience even easier and simpler for our customers. Our recent announcements mean we will extend our leadership in delivering customers the best viewing and user experience in Europe.
This European partnership will see Netflix - along with the new Sky TV pack - launch on Sky Q in the UK and Ireland in the coming year. Netflix will launch on Sky Q platforms in Germany, Austria and Italy thereafter.
The agreement with Netflix also extends to Skys contract free streaming services. In the UK and Ireland, Sky will launch Netflix as a standalone app on NOW TVs family of streaming devices including on the NOW TV Smart Stick which was recently launched in the UK. Sky Ticket in Germany and Austria, and NOW TV in Italy, will launch a standalone app on their devices in due course.
SKY/ FOX/ COMCAST - IMPLICATIONS OF COMCAST POSSIBLE OFFER (SQUARE)
2018-02-27 17:05:33.900 GMT
We think important to clarify / re-iterate a few technical points which may
educate deal dynamics here:
* Fox cannot withdraw its £10.75 bid for the fully diluted share capital of
Sky which it does not already own,
* More importantly, Fox cannot tender its 39% stake in Sky to Comcast unless
agreed by both:
1. The UK Takeover Panel, per rule 4.2 of the UK Takeover Code
Restrictions on dealings by the Offeror and Concert Parties;
2. Disney itself, per point 2.a) Transfer Restrictions of the Voting
Agreement -Exhibit 10.1 of the Fox / DIS Merger Agreement
* Fox needs the approval of Disney to counter the Comcast offer given Fox is
required to seek the approval of Disney to incur any additional
indebtedness above $400m per Fox/Dis Merger Agreement Article V,
Covenants b), iv)
* DIS buying in the market to block Comcast Offer is not a plausible
1. It would contradict the case they made to the Takeover Panel of them
not having to launch a mandatory given buying Sky shares at this
stage would likely fall under significant purpose (per note 8 of
R9.1 of the Code)
2. Also, under rule 9.5, this mandatory offer would need to be in cash
and at the highest price paid by the offeror for Sky shares in the 12
months before the offer was announced
In light of the above, it is fair to say that DIS is now effectively in
control of what will happen with the Sky / Fox scheme in terms of price level
* The cleanest way for DIS to completely block Comcast would be to allow
Fox to pay up substantially
* Ideally they also manage to gather ~10%+ irrevocables which would
ensure Comcast then does not reach its 50%+ acceptances
* In a potential bid war scenario, gathering irrevocables could
prove extremely tricky at best they would be soft with a
collar i.e. fall away in case of higher Comcast offer of x%
We think if DIS decides they need 100% of Sky, they may have to pay up in the
* They are facing a Comcast with sizeable firepower - though it would
already reach a 3.0x PF leverage, adding - say - half a turn gives them an
additional envelope of c.$15bn cash to deploy
Safe to say Comcast does not seem to be in for the 100% of Sky, nor can they
really count on it
* This takeover offer is a defensive move engineered to force some kind of
distribution / content agreement partnership with Disney once they are a
majority owner of Sky
* Michael J. Cavanagh (CFO) during Investor Call Q&A argued he had no
preference between majority and 100% ownership
If DIS decides it is not financially viable anymore for them to pay up for the
100% control of Sky, they have two options:
1. No improvement to scheme offer price Fox Scheme voted down but DIS still
ends up owning 39% in Sky upon completion of Fox deal
2. No improvement to scheme but - with the Panel blessing - DIS lets Fox
monetise the 39% Sky stake with £12.50 Comcast Takeover Offer
* This would lead to, in a way, a cleaner ownership structure for the
The above all boils down to the relative players strategic objectives which
no outsider can really put a price tag on
Sky Independent Board Recommendation is still uncertain
* On paper, absent any counter offer from Fox, Sky Independent Board would
likely change their recommendation for the Comcast offer which also
carries less execution risk from a regulatory standpoint
* However, the weak point in the Comcast offer is the deliverability by
way of acceptance threshold
* Even as low as 50%+1, it could prove tricky if you count out the
Murdoch stake and the tracker funds
* Note: once the Takeover Offer is launched, Comcast would be able to buy in
the market and these would count toward acceptances
* Note: a change of Sky Board recommendation would lead to termination
True - but it is a greater hurdle to get an effective controlling stake starting from a 39% base than Comcast's zero.
Also, I think that y the end it, there will be a 5% at least difference between the final offers by each company. The directors will need there to be a clear difference between the bids to enable them to recommend one over the other, not just tuppence a share.
Fox have the advantage in them already having the 39% shareholding. I presume they are taking now to Disney about how the extra cash is financed and then they just flip it to them.
It will have to be an improved offer because the current independent directors (am not sure about the validity of that term as they have been happy to take the shilling for so long) can't justify the current £10.75.
Option d I would put at less than 0.1%. Stranger things have happened but the genie is out of the bottle.
so, in your (or anybody else who may wish to comment) opinion, do you:
a) see Comcast as the owner at the initial price or one higher than mentioned?
b) see Fox as the owner with an improved offer?
c) see Disney entering the fray with a direct offer themselves?
d) Nothing changing?
The releases Comcast have made indicate that this is just the first offer.
First of all - they stress that this is a 'superior offer' or to put it another way.
'Independent directors conduct a proper auction or you will be sued'.
Second - they mention that the price they are bidding would lead to an improvement in Comcast's free cash flow per share in year one. What kind of bidder says that? One who knows they will have to pay more.
This opening gambit is basically to freeze the momentum towards sky and i fully expect a further iteration from Comcast and Fox/Disney.
I thought the bid was undervalued and that the premier league action added 100p to Sky's value. Is well worth the hold with a downside of £12.50.
Pyueck, I was primarily pointing out the price in February 2016 @ £11 and the manner it got suppressed to ~£9.00 (not sure exactly what it was on the day of the bid) through the purchase of SKY Germany and Italy. Hence the markets valued SKY @ £11 the same year irrespective of what you or I think.
We have always had differences of opinion but the company was no different to that on Feb 2016, hence undervalued @ £10.75, that is the point.
Cimbom, while I have already eaten my humble pie. I should say that I never said the deal will not go through or that another bidder wouldn't come in. I said that in my eyes, especially with the huge risk of the PL rights £10.75 was a fair price and one that shouldn't be sniffed at. I was, am still am bearish on Sky's long term proposition, but fully appreciate that the latest PL rights deal was a very positive one for Sky.
Yes events have gone Sky's way, the PL rights was an excellent result for Sky and as per my note at the time I think Fox was cheeky thinking that they could get the benefit of this without paying more, as if the PL rights was lost I strongly believe Fox/Disney would have walked.
The P/E ratio is now approaching 34, so I cannot really fathom why anybody could argue that the new bid is undervalued. However I have no idea what Disney, Fox or Comcast will do next and I wouldn't rule out a bidding war.
I read questions being raised belatedly about Fox selling Sky Germany and Italia and subsequently buying them back through SKY deal. That was one of the actions Fox/BSkyB directors took to suppress Sky share price creating a big debt in Euros, particularly post Brexit, appearing like an increasing liability. Of course once share price was suppressed, £10.75 looked like an attractive offer to some!
Not really, the 10p 'special dividend' is about one third of what would have been paid during 2017 and even the Murdoch's wouldn't try to get away with indefinitely suspending dividend payments. It's not as black as I painted it but history shows a couple of attempts to get full control of Sky at pretty average prices.
I think this what appears to be an "agreed bid" looks like a con to boost share price perhaps to aid Sky's creditworthiness. Fair price is at least £14.
Sky is producing a lot of cash, hugely profitable, very successful in dramas, retained all important PL, now likely to make positive impact to customer retention with Sky mobile. NOW TV is making huge contribution and expanding in many countries, with Sky Q a huge success, Sky broadband well positioned to take over first spot from BT...most important of all businesses being tuned around in Germany and also in Italy; future is bright.
£10.75 is a con! I would vote against!
By the way, as we all know this bid did not happen overnight, therefore pre-bid price is actually ~ £11; price of shares at the beginning of 2016! One way or another manipulation of directors if there is any and FOX would be exposed unless they pay the fair price for the company! The deal at £10.75 is dead!
You have forgotten that in addition to the 10p dividend paid for the deal not being completed by the 31st December 2017, a further 13p per share is due shortly becuase of the increased value in the company following the half year results
Obviously delighted about this from the perspective of getting more for my shares.
But equally delighted that the sheer meanness of Fox looks like it's bitten them back. Not just the 1075p offer which was hurriedly accepted by Gilbert and the other 'independent directors' but the strange decision to suspend dividends during 2017 for a process that one man and his dog could see was going to have regulatory complications.
Let's hope the Sky deal goes through at this or a higher price and the Disney/21st Century Fox deal unravels as a result.
Even if Disney had separately bought the Sky stake from Fox, they still would have had to offer to buy the remaining shares at the price they bought it from Fox. This just means not starting a process from scratch.
You might be right, not sure the downside is too great unless the Sky board for some reason bat away the comcast offer.
The potential upside is what Fox, or probably more likely Disney do now. Always though the Fox/Disney deal structure was bizarre, for many reasons, including a) why Fox was buying back Sky Italia and Deutschland assets it sold a few years ago at a higher price? and b) why they were still going through the process of Fox getting regulatory clearance when Disney were going to be the eventual owners.
I suspect Fox will be spitting feathers as it puts the whole Fox/Disney deal in jeopardy. Were they buying the Sky assets at a lower price than they were selling them to Disney for, if not why were they bothering with the great hassle of still going through with the Sky deal? Disney are shrewd proud operators, they have told the markets that Sky is joining their family, it will be a blow to their pride if it doesn't.
I guess in a dream world Disney would come back with a higher offer and then Comcast raises its offer again...ad infinitum. Some stocks in the US are priced at crazy p/e ratios and even if I think a higher offer would be crazy, doesn't mean it won't happen.
Correct - they cant just walk away from the bid.
The onus is still on Fox to make a compelling offer once the regulation is cleared up. I make the saving on the football worth £1 in itself and that is ignoring the risk premium taken out due to a safely conducted auction.
Ok I grant you I got it wrong, Sky should be mightily happy with the PL rights deal. The deals are always hugely risky for Sky as the sustainability of its model without PL football is unproven.
I suspect if Sky had lost the rights Fox/Disney would have walked. As it happens Sky has got a really good deal and therefore the Fox/Disney price should reflect this. Another 200p seems reasonable to me as in my opinion without the bid the comparative cost of the rights could well have added 20% on the share price.
If Sky are interested, and the signs are they are not, they could only have one more package max as the rules say one broadcaster cannot have more than 148 matches. Currently they have 128 with two packages of 20 still on the table.
True about the cost per match - but there are more matches - so if they won the remaining packages they could pay an aggregate increase.
The takeaway is that the market was worried that they would lose a load of matches or they would have to pay an increase of 20 to 30%. So a sign that the era of rampant cost inflation is over.
There is - the voting mechanism once regulatory clearance comes through.
Looking like things are coming into place with the Fox concessions on governance and the TV football rights coming in at a modest increase.
I would hope that the independent directors are talking to the large institutional investors on an improved price. The fact we are trading over the bid price implies so.
Sky has extended its Premier League rights through to 2022 and will show more matches than ever before.
With four packs of rights totalling 128 games a season - up from 126 matches currently - the deal to run from 2019 will offer Sky Sports viewers every first-pick weekend match, plus Saturday evening fixtures for the first time, all screened on Sky's dedicated Premier League channel.
Following the outcome of the recent Premier League auction, Sky has acquired the following rights between 2019/20 and 2021/22:
The biggest head to heads with every weekend 'first pick' and 14 'second picks'
The best slots including Saturday tea time matches, Super Sunday, Monday Night Football and Friday Night Football
For the first time, Saturday evening matches
The agreement strengthens Sky's position as the best provider of the broadest range of content, which includes 10 channels of sport covering live Premier League, English Football League, Scottish Football, exclusive coverage of Formula 1 from 2019 to 2024, plus England cricket through to 2024.
This great sport sits alongside the best drama, comedy and entertainment, which will include over 50 Sky Original productions over the course of 2018. These content investments across the whole portfolio reflect Sky's continuing journey towards a more broadly-based business which seeks to provide something for every household and everyone in the household
Today, the CMA has published details of the proposed solutions put forward by 21st Century Fox to address the CMAs provisional concerns and ensure the continued editorial independence of Sky News in the event of the deal being approved.
Those remedies include:
A commitment to maintain Sky-branded news services in the UK for at least five years with similar levels of investment.
A commitment to establish a fully independent, expert Sky News Editorial Board to guarantee the editorial independence of Sky News.
A commitment to maintain and enhance the Sky News Editorial Guidelines to provide further safeguards that the Head of Sky News will retain control over editorial matters and the instructions given to journalists and other editorial staff.
A commitment that no employee or officer of 21CF, or a member of the 21CF board who is a trustee or beneficiary of the Murdoch Family Trust will influence or attempt to influence the editorial choices made by the Head of Sky News.
Sky has also released a statement today which says:
The Firewall Remedies proposed by 21CF are both effective and proportionate in addressing the CMAs provisional concerns, building on Sky News existing strong editorial independence.
The process will now continue with consultation on the CMAs provisional findings closing tomorrow.
The final version of the CMA report will be sent to the Secretary of State by 1st May.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.