Sky share price jumps as investors welcome Comcast’s winning takeover bid

Customers unlikely to see any immediate change, analysts said, and Sky’s new owner will not want to kill off ‘golden goose’ of growing customer pool

Sky shares jumped by 9 per cent in early trading on Monday after Comcast won an auction for the broadcaster with a £30bn bid, beating Rupert Murdoch’s Fox to clinch the deal.

Fox and Comcast had been battling it out to take over the British company for years, until the UK’s Takeover Panel took the unusual step of directing that the buyer should be decided through an auction.

After the maximum three rounds of bidding on Saturday, Comcast offered £17.28 per share, compared to 21st Century Fox’s £15.67 per share for the 61 per cent of the company it does not already own.

Sky’s independent committee has advised shareholders to immediately accept Comcast’s offer.

Martin Gilbert, chairman of the committee, said the bid is “an excellent outcome for Sky shareholders” and represents “materially superior value” to Fox’s offer.

Comcast won with a blind bid, and Suzanne Rab, a barrister who specialises in competition law at Serle Court, said: “Critics might say that blind bidding and sudden death procedures fuel overvaluation.

“It might be asked whether Comcast has bid too high, but Sky has been described as a ‘unique asset’ and a ‘jewel in the crown’.”

In buying Sky, Comcast gains a customer base of 23 million, as well as assets across several European markets. The company is struggling with a decline in customers in the US, as it battles rising competition from rivals such as Netflix and Amazon, so the opportunity to diversify and expand overseas will be welcomed.

Rebecca O’Keeffe, head of investment at Interactive Investor, said: “The premium that is being offered by Comcast is indicative of how much pressure is on traditional media platforms. Their newer, tech-savvy rivals have revolutionised the way people engage with TV and internet content and these technology giants are investing huge amounts of money into both popular shows and new content to keep customers coming back for more.

“Legacy media companies are desperate to find a place in this new order and consolidation in the sector is likely to continue, with companies that can deliver new markets and opportunities being highly sought after.”

Mr Murdoch’s Fox still owns more than a third of the company, although it has said it is now reviewing its options.

The media mogul made an £8bn swoop for Sky in 2011 but his plans were derailed by the phone hacking scandal that engulfed his empire.

Meanwhile, in terms of what the deal means for Sky customers, Ms Rab said: “They are probably unlikely to see any immediate change. Only time will tell. Comcast has had to dig deep to fund its offer. It will understandably be looking at creating synergies and cutting costs.

“Where those savings will come from and the extent to which they will be passed on to customers is not entirely clear. Whoever ultimately controls Sky will not want to kill off the golden goose by alienating its growing pool of customers through higher prices and less choice. It will need to continue to invest in quality services and features, including premium sports content, which is arguably one of its most prized assets.”