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.
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
Barton Crockett, media analyst at B.Riley FBR, writes: “It meaningfully reduces the net cash outlay for the Fox transaction.”
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
Mid-day Monday trading of Disney stock was up 2% to $112.77; Comcast was down 8% to $34.89.