Comcast reaches for the sky

Michael Baxter examines some recent bids made in some efforts to secure Sky

Article updated: 1 March 2018 10:00am Author: Michael Baxter

Fox wants to buy Sky, Disney wants to buy Fox, now Comcast, which would also like to own Fox, and once made a bid for Disney, has made a bid for Sky. But there is something even bigger than the sky at stake here.

I would imagine that Jerry Hall and UK regulators feel quite different about Rupert Murdoch - one assumes that the Texan supermodel, former wife to Mick Jagger, loves Rupert. The UK regulator appears to feel quite differently.

But then Rupert Murdoch is not everyone’s cup of tea - and when the phone hacking scandal of a few years back put an end to that once venerable newspaper called the ‘News of the Screws’, there were many who felt quite delighted.
The saga also put an end to the Murdoch bid for Sky - for a while.

But then, once the dust had settled, and a few years had gone by, Rupert was back, reaching for the Sky once again.
Via his shareholding in 21st Century Fox, he already has a 39 per cent chunk of Sky, but Mr Murdoch has long coveted more.

Bigger than Sky

But what is bigger than the sky? Well, the world is, and the Murdoch’s used to own the news pertaining to that location, the sun is, and he already owns that, but the universe is even bigger, and that, or at least NBC Universal, is owned by Comcast.
A certain Micky Mouse company is bigger than Sky too, of course.

No prizes for guessing what this all about. The golden age of Hollywood may have belonged to a different era, but this is the age when TV and movie content is not only really big business, it is about to get bigger still, becoming really, really big business.

Comcast and Disney are worried about Netflix, Amazon and Apple. It is, by the way, a crime that they are not also worrying about a BBC and ITV combo, but you can blame a jealous UK media and market obsessed politicians for stopping the BBC from fulfilling potential.

Satellite on your roof

There was a time when people thought of a satellite as something that was in orbit around the world, but then millions of homes had satellite dishes installed on their roofs, and a satellite was something all good sports fans had.

It seems it was such a fan that persuaded Brian Roberts, the chair and chief exec of Comcast, to extend an offer for Sky. Mr Roberts was in a London taxi when the cabby extolled the wonders of owning a Sky satellite.

Roberts and Murdoch

Actually, there is a certain similarity between the Murdoch family and the Roberts family. Just as the young Rupert created the empire we all know today from a local newspaper in Australia, whose ownership he inherited, the Roberts family, starting with Ralph (father of the current boss) creating the Comcast empire from a small business in Mississippi.
I have no idea how similar or different the Roberts and Murdoch politics are.

The bids

Back in 2004, when Disney was in its own crisis, Comcast made a $54 billion bid for the company founded by a certain Walt. Today, Disney is worth $155 billion, Comcast $168 billion, 21st Century Fox $68 billion, and Sky £23 billion ($32 billion).

Netflix, on the other hand, is worth $126 billion.

But these companies are minnows compared to Amazon, worth more than all of the above firms put together and Apple, just $100 billion short of a trillion dollars.

The Comcast bid values Sky at £22.1 billion, the Fox bid valued Sky at £18.5 billion, but then Sky shares are up almost 50 per cent since November and of course rose sharply after the Comcast bid was revealed.

It’s a new world now

But there are two reasons why the content/movie/TV market is becoming so hot. Firstly, the internet has created the potential of global audiences and totally disrupted the distribution model. Sky is of particular interest because of its European distribution.

Secondly, new technologies are creating hyper realistic viewing experiences - and that sucks viewers in. As the movie/TV industry went from black and white to technicolour to the latest incredible picture and sound quality and from tiny black and white boxes in the corner of the room to wide screen, high definition, LCD screens, it is my assertion that the medium became bigger.

But the next step will be virtual reality - a truly immersive medium. In some ways, VR scares me, what will it mean for us Homo sapiens if virtual reality becomes more appealing than reality?

But for companies in the business of entertainment, via the big screen, the tiny screen in our smart phones, or the increasingly bigger screens in our living rooms, or maybe, from screens that surround our heads providing 360-degree landscapes, the opportunity for disruption and ultimately a trillion dollar plus valuations, is waiting to be taken. The Sky may fall during this process, but only after netting shareholders a fair few bucks.

These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.

Michael Baxter portrait photo
Michael Baxter

Economics Commentator

Michael is an economics, investment and technology writer, known for his entertaining style. He has previously been a full-time investor, founder of a technology company which was floated on the NASDAQ, and a director of a PR company specialising in IT.

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