Walt Disney is not getting the winning bid to buy 61% of U.K.-based Sky, the European satellite TV broadcaster. And according to analysts, that's good news for the company.
In
analyzing the winning $40 billion bid by Comcast Corp, Craig Moffett and Michael Nathanson of MoffettNathanson Research, write:
“We fear that Sky will be an
albatross. Comcast would like to have investors view Sky as a platform-agnostic collection of proprietary programming agreements that can serve as a springboard to create a global OTT provider...
But it seems as though they would like investors to forget that it is also a satellite TV provider, and satellite video distribution is increasingly becoming obsolete.”
In addition, it will help reduce Disney’s recent $71.4 billion deal for half of 21st Century Fox -- especially if Comcast looks to buy the remaining 39% piece that Fox owns -- now a part of
Disney.
Barton Crockett, media analyst at B.Riley FBR, writes: “It meaningfully reduces the net cash outlay for the Fox transaction.”
He
adds: “[Disney’s] Sky stake now appears to be worth about $15 billion. If Disney is able to tax-efficiently tender that stake to Comcast and tax-efficiently divest Fox's regional sports
networks for the valuation -- we assume of $20 billion -- the sum total of $35 billion in cash would basically match the $35 billion of cash Disney has agreed to pay for Fox.”
Although praising the Comcast deal, some might say, Comcast will now having 23 million satellite and 2 million OTT subscribers in Europe. It becomes a leading sports TV provider in Europe,
as well as gaining overall content rights licensed to Sky for years to come.
However, Todd Juenger, media analyst for Bernstein Research, says: “In our view, none of
these are vital to Disney's DTC [direct to consumer] entertainment strategy or without substitutes that Disney could avail in a much less value destructive way than paying $39 billion for
Sky.”
Mid-day Monday trading of Disney stock was up 2% to $112.77; Comcast was down 8% to $34.89.
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Craig Moffett and Michael Nathanson of MoffettNathanson Research, apparently unaware of Now TV and Sky's use of internet for all non-broadcast content. Not surprised as they likely have no direct experience with Sky or it's technology being located in NYC where Sky has no presence. They may be surprised that there are places in the world where cable reaches even less than the 60% in the US.