Which Comcast channel is FOX on
Comcast is separating from Sky?
Comcast headquarters in Philadelphia
Photo: Bruce Emmerling / Pixabay A few years ago there was a takeover battle between the US media groups 21st Century Fox and Comcast. It was about the future of Europe's most important pay-TV operator Sky. The Australian-American media mogul Rupert Murdoch wanted to reorganize his Fox empire and then pass Sky on to Disney. This plan did not work, however, because Comcast was awarded the contract for around 33 billion euros.
But the deal doesn't seem to be really happy to this day. For example, Steven Cahall, an analyst at the influential US bank Wells Fargo, recently spoke out and advised Comcast management to part with Sky. The European pay TV provider does not fit in at all with Comcast's business, the individual activities of the group diverge strongly. He referred, for example, to the Comcast streamer "Peacock", which, like Sky, operates in the direct-to-consumer business, although Peacock is overall well behind the competition.
Spin-off of cable business
Comcast headquarters in Philadelphia
Photo: Bruce Emmerling / Pixabay Cahall suggested that Comcast should spin off its cable business from the other group activities with NBCUniversal and Sky. One of the goals is to increase free cash flow and increase sales. Above all, this could result in a perspective of increasing value for the entire company. The analyst also criticized the fact that the needs of Sky and Comcast diverged widely, which led to a decline in sales of 15 to 20 percent.
Wells Fargo is a very well-known major bank in the USA and the words of its analysts carry a lot of weight on the stock exchanges. Should other analysts join this understandable position, Sky could even be sold quickly. But Comcast will have little interest in selling its stake at a loss. So the crucial question arises as to who would put more than 33 billion euros on the table for Sky. The field of potential takeover candidates is at least currently manageable.
Time would be inconvenient
It is unlikely that Disney will make so much money for a Sky takeover in the midst of bitter losses from the corona pandemic. The Mickey Mouse Group is currently in a state of deep change and is reorganizing its business. Instead of amusement parks and cruises, streaming is currently the focus. Sky's linear pay-TV business doesn't really fit into the concept, especially since Disney is now putting its own linear channels in the background and has already said goodbye to Sky in this regard.
Sky would probably not find a new home at Fox either, because the group has largely separated from its entertainment and studio business and has already sold it to Disney. A deal could be interesting for ViacomCBS, because the media group is still well represented in the linear television business in Europe with brands such as Nick, MTV and Comedy Central and also has a lot of experience in the pay-TV business. In theory, of course, a Chinese internet company like Alibaba with a market capitalization of around 580 billion US dollars (as of 2020) could swallow Sky out of the postage, but such a scenario seems rather unlikely.
What about Amazon and Netflix?
At Amazon and Netflix there have recently been repeated discussions about the start of a linear TV channel. Sky's infrastructure would give the two companies completely new options within Europe. However, it is extremely questionable whether European competition watchdogs would even agree to such a takeover. Imagine an internet giant like Amazon running one of the most important television broadcasters in Europe in addition to all of its previous activities. That could have a not inconsiderable effect on the plurality of opinions, after all, Sky owns important news channels such as Sky News and Sky TG24 in Great Britain and Italy, for example.
In summary, it can be assessed: Even if Comcast Sky really wants to sell at the moment, it should not be easy to find a solvent buyer. Especially since the classic business with linear pay TV no longer fits in with the direct-to-consumer strategies of the US media groups. And even a non-strategic investor would probably not be able to enjoy the current rather loss-making business with pay-TV in Europe for long.
In another interview, we discuss whether Sky's business model still has a future.
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