Comcast shares slide over concerns about Sky price tag

Darnell Taylor
September 25, 2018

Comcast shares fell about 6 percent in trading Monday after the telecom giant's $40 billion bid to acquire European cable network Sky triggered multiple Wall Street firms to downgrade its stock rating.

Comcast, one of said competitors, has now emerged as the front-runner in what has become a bidding war for the company - and Sky shareholders are being urged to accept its offer of £17.28 per share, up on Fox's £15.67 per share, in a deal valued at nearly £30 billion.

And based on the Comcast offer, UBS analyst John Hodulik values the Disney/Fox stake in Sky at about $15.5 billion and Comcast's stake in Hulu at $3 billion.

In July, Comcast submitted a US$34 billion bid to buy the broadcaster just hours after Rupert Murdoch's company raised its own offer to US$32.5 billion. Comcast is one of the largest cable television providers in the US, with around 29 million customers.

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"If Comcast gets 100 percent, it certainly puts a lot of stress on its balance sheet", Sarma said. Sky's board recommended accepting the offer.

Neither Fox nor Disney have said what they intend to do with the stake. A bidding war with Fox ensued, culminating in an auction on Saturday in London.

"Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team", said Comcast chairman and chief executive Brian L. Roberts.

PJT Partners Inc., Robey Warshaw LLP, Evercore Inc. and Centerview Partners are the small advisory shops that worked on the battle between Comcast Corp. and Twenty-First Century Fox Inc. for control of Sky. Shares of Disney were up by 2% and Fox shares climbed 1.1.% while Sky surged by 8.9%.

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