Comcast Acquires Sky But Analysts Are Skeptical

NBC and Comcast logos are displayed on 30 Rockefeller Plaza in midtown Manhattan in New York
Comcast officially announced its acquisition of pan-European satellite TV company Sky. (Photo: REUTERS/Lucas Jackson)

U. S. cable company Comcast announced on Oct. 9 that it has completed the acquisition of pan-European satellite TV company Sky.

Specifically, the company bought the 39 percent shares owned by Twenty-First Century Fox. With this, the offer for Sky has become unconditional, Comcast said in its announcement. The U.S. cable company is now the majority shareholder of Sky which enjoys almost 23 million European viewers, owning more than 75 percent of the European satellite company's issued ordinary share capital.

Brian Roberts, chairman, and CEO of Comcast Corporation said the acquisition is only the start for more investment and growth in Sky's brand and platforms. Roberts assured that Comcast will respect Sky New's editorial independence and preserve the organization's trusted name in delivering high quality and impartial news.

Jeremy Darroch, group chief executive officer of Sky, said his team is now looking forward to developing the Sky's business as promised by Comcast.

Last month, Comcast outbid Fox for $40.1 billion for Sky. The latter's highest bid was only $31 billion. To this, analysts believed that the U.S. cable company has overpaid for the shares, probably due to pressures over tougher competition for viewers against Netflix and Amazon.

Analysts with the New Street research firm said Comcast would have done it better if they walked away from the bidding when it reached $40 billion.

For Zach Fuller, an analyst with MIDiA, thought Comcast's move was too risky for its public image. He told CNBC that if ever the deal would not align with Comcast's goal of expanding beyond their American viewers, then it could be an "absolute PR disaster" for the company.

Some analysts, on the other hand, saw the direction that Comcast is going at when it acquired Sky.

Sky has just released a streaming service akin to Netflix. Jeff Wlodarczack, an analyst at Pivotal Research Group, said with its acquisition of Sky, Comcast could soon have its hand on a platform that could directly compete with Netflix which has become the ultimate favorite for the younger crowd.

Craig Moffett, an analyst with MoffettNathanson, said Comcast might win the market as young viewers continue to turn away from other cable networks over streaming services. With Comcast and Sky's new semi-streaming service, these two companies could both work as both cable operators and stream providers.

For the meantime, Comcast's major advantage in the deal is having rights over live sports content and other news content as it now has revenue channeled from NBC News, CNBC, MSNBC, and Euronews.

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