Sky's actions jump after Comcast won an auction

LONDON (Reuters) – Sky (SKYB.L) shares jumped 9% Monday at less distance than Comcast (CMCSA.O) will buy the largest pay-TV group in Europe after being defeated by Twenty-First Century Fox (FOXA.O).

The US cable television giant offered $ 40 billion in a rare auction this past weekend that ended its battle with Rupert Murdoch's Fox and Walt Disney Co (DIS.N), who would have been the ultimate owner of Sky if Murdoch had succeeded.

However, concerns over the premium paid by Comcast have been reflected on the New York stock market, where Comcast shares have lost more than 6%.

Analysts at MoffettNathanson downgraded Comcast from "buy" to "neutral" and Oppenheimer, from "outperforming" to "performing." Fox shares, by contrast, rose 0.6% and Disney gained 1.7%.

Comcast and Fox / Disney both wanted Sky's control to increase their presence in Europe, where pay TV is increasing, and to access Sky's 23 million customers, which would strengthen their defense against Netflix's streaming services. Amazon.

The price was rated much higher by Comcast in the third and final round of the auction, while it offered 17.28 pounds, while Fox offered only 15.67 pounds, a level lower than that shares of Sky on Friday. Sky's shares were at 1721.5 pence at 13:50 GMT on Monday.

Comcast, which owns the NBC network and Universal Pictures, quickly gained support from Sky's independent directors.

Comcast is paying a hefty price – more than double the price of Sky's stock before Fox takes its initial approach in December 2016 when it offered £ 10.75 per share.

A senior analyst at a London-based hedge fund company said it was an "incredible result."

"Not only the absolute number but also the gap between the two offers, which could lead Fox / Disney to sell its stake (or at least part of it), thereby reducing the risk of the Comcast offer which is conditioned to more than 50 percent acceptance, "he said.

The study firm MoffettNathanson said that he feared that Sky would be an albatross at Comcast.

"Comcast would like investors to view Sky as a collection of proprietary platform-independent programming agreements that can serve as a springboard for creating a global over-the-top (OTT) provider. many proprietary programming agreements, "he said.

"But it seems that they would like investors to forget that it is also a satellite TV provider and that satellite video distribution is becoming more and more obsolete. "

FOX HOLDING

The big hurdle to Comcast's ambitions is Fox's 39% stake in Sky, and he agreed to sell to Disney as part of a separate $ 71 billion deal.

Fox's position, which Comcast's offering represents more than $ 15 billion, stems from Murdoch's role in creating the company as a pioneer of British pay-TV almost three decades ago.

Fox / Disney did not say if they would accept the Comcast offer. Without this participation, Comcast will need approximately 82% of the remaining shares for its offer to pass the acceptance threshold.

Analysts at Royal Bank of Canada have said that if Fox / Disney does not deposit its shares, Comcast would not be able to write off Sky or eliminate them.

"This could be used as leverage by Disney in exchange for distribution rights, or as part of any future asset swap," they said on Monday.

Sky operates in European markets such as Britain, Ireland, Germany and Italy. The deal also gives Comcast an immediate bridgehead in online video streaming with its Now TV business, which has approximately 2 million customers.

Comcast Chief Executive Officer Brian Roberts praised Sky's technology after quietly testing it during a private tour of a mall during a previous trip to London.

Analysts see Comcast super-charging Now TV to fight Netflix around the world. And Sky's relationships to distribute HBO entertainment content and Premier League football still isolate Comcast over the next few years.

The deal with Disney will let Fox focus on assets such as Fox News Channel and its broadcast sports such as the National Football League and Major League Baseball.