Sky profits set to rebound as bidding war between 21st Century Fox and Comcast heats up

Analysts are forecasting a rise in operating profits to £1.55bn in the 12 months to 30 June

Kalyeena Makortoff
Monday 23 July 2018 00:04
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Sky is expected to report a rebound in full-year profits on Thursday, helping to maintain its appeal as a takeover target as 21st Century Fox and Comcast continue their bidding war.

Analysts are forecasting a rise in operating profits to £1.55bn in the 12 months to 30 June from £1.42bn a year earlier, according to consensus forecasts.

That almost returns the UK broadcaster to the profits it recorded in 2016, having fallen a year later after absorbing £629m in costs linked to its deal to show top-tier English football.

It is also expected to log a 5 per cent jump in revenue from £12.9bn to £13.6bn over the period.

But its full-year results – which will be released on Thursday – will be overshadowed by a takeover tussle that could see it come under the full ownership of Rupert Murdoch’s 21st Century Fox or Comcast, which have both put forward multibillion-pound offers.

Comcast recently increased its bid for Sky to £26bn, just hours after Fox hiked its offer to £24.5bn.

All eyes are now on Fox to see if it will increase its bid for the 61 per cent of Sky that it does not already own.

Comcast – which owns NBC Universal and is the largest cable operator in the US – has also dropped separate plans to bid for some of Fox’s entertainment assets in order to “focus” on its recommended offer for Sky.

​Laith Khalaf, a senior analyst at Hargreaves Lansdown, said: “It’s been a spectacular year for Sky shareholders, who have seen their share price rocket thanks to the bidding war between Comcast and Fox.

“The underlying business is doing well too and has successfully navigated a Premier League rights auction where thankfully the bar didn’t get raised in terms of the cost to Sky of buying in its large share of games.

“Shareholders will be chuffed to bits with the Comcast offer for Sky; the only downside is they’ll have to give some thought to where to reinvest that cash.”

Fox was recently given the the UK government’s all-clear to take over Sky, with newly appointed culture secretary Jeremy Wright saying he agreed with his predecessor’s final decision to accept Fox’s planned sale of Sky News to Disney – a move clearing the final regulatory hurdle for Fox.

There had been concerns over the impact that Fox’s takeover of Sky could have on UK media, given that the Murdoch family also own News Corp, publisher of a raft of newspapers including the Sun and the Times.

Under its plans to appease government concerns over media plurality, Fox has pledged to offload Sky News to Walt Disney, and provide a Disney-owned Sky News channel with funding of at least £100m a year for 15 years.

The government has already separately cleared Comcast’s bid for Sky.

PA

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