Analysis: Comcast gatecrashes Murdoch’s takeover of Sky
The great disrupter has had his well-laid plans thoroughly disrupted, writes Raymond Snoddy
Maybe we should all listen to black cabs drivers a bit more – as long as they can be kept off politics and the plight of Arsenal.
At this week’s Shift conference on the power and impact of national newspapers, a star turn, who attacked the threats to deep thinking and creativity from constant online interruptions, spoke of the brains of cab drivers.
Dave Birss, founder of RIGHT Thinking, told of research that showed that the brains of bus drivers and taxi drivers before they started acquiring the fiendishly difficult “knowledge” were the same.
Four years on and the brain of bus drivers had not changed. The hippocampus, the part of the brain associated with long term memory had grown in the case of qualified taxi drivers, after memorising routes to 20,000 streets and locations of thousands of buildings.
We now know, courtesy of the Financial Times, that one of those London cabbies with a great memory may yet be responsible for helping to scupper Rupert Murdoch’s deal to acquire all of Sky. And maybe the sale of most of his US television and video assets to Disney may also be undermined.
The man in the back of the London cab in November was none other than Brian Roberts, chairman and chief executive of Comcast, the largest cable operator in the US, which also owns NBC Universal.
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The unknown cabbie explained to Roberts in great detail the positive merits of Sky compared to Virgin Media and Roberts followed up by getting a demonstration of a Sky Q set-top box in a London shop.
“We were terribly impressed,” said Roberts, the son of the Comcast founder.
And so it was that an already complicated situation – the future of Sky and 21st Century Fox – just got even more complex. You would need a cabbie’s memory to keep track of it all.
In the background there still lurks AT&T’s hoped for $85.4 billion acquisition of Time Warner, owners of CNN.
Here CNN has been creating difficulty – just as the fate of Sky News has been causing waves in the Sky sale in the UK.
President Trump has made no secret of his contempt for CNN, which he has accused of being a purveyor of “fake news,” for daring to broadcast facts.
Quite independently – one hopes – the US Department of Justice has been suggesting that CNN would have to be sold if the deal is to go ahead. A court hearing on the takeover is scheduled to open next month.
Earlier a Comcast approach for the Murdoch assets was rebuffed in the face of the regulatory hurdles being encountered by AT&T.
Those who had been away would be surprised that the origins of the Disney/Fox deal came from a few glasses in a Murdoch winery. Over the drink a mutual realisation dawned in the minds of Bob Iger of Disney and Rupert Murdoch – allegedly – that neither were big enough on their own to take on the social media giants and the likes of Netflix.
It seemed like a very neat package. Murdoch’s regulatory difficulties in trying to take over the 61 per cent of Sky he does not already own would evaporate in the face of a “respectable” Disney ownership.
Murdoch was even prepared to guarantee the funding of Sky News for 10 years, a commitment believed to be worth more than £200 million, to ease the passage of the deal.
Everyone started to play the Murdoch business requiem even though he was leaving with mountains of cash and Disney shares while holding onto to Fox News, Fox sports channels, his US local TV stations and the remnants of his newspaper empire.
It looked to everyone like the final act of a remarkable drama and a decent retirement package.
But with Rupert Murdoch the end is rarely ever the end – even when he is no longer the one pulling the strings.
Now the outcome is impossible to predict because there are so many variants, but Sky investors must be licking their lips over a cat-fight for the company which could drive the shares even higher than the immediate 22 per cent boost to the Sky share price on the Comcast News, well above the 16 per cent Comcast premium.
There could be a higher bid from Murdoch for Sky – there will have to be if he wants to stay directly in the game.
Equally possible is a new bid-by-proxy via Disney. There are rumours that even a new entrant to the battle is possible.
It could end in a carve up with Disney getting the 21st Century Fox assets and Comcast buying Sky. After Sky, Comcast could go for the 21st Century Fox assets, if AT&T finds a way over the regulatory barriers and gets its hands on Time Warner.
The most likely outcome is that Roberts will focus on Sky, after all Comcast is huge in the US and already has a Hollywood studio.
For Comcast, Europe is the new land and Sky would instantly deliver 24 million subscribers in five European countries – the UK, Germany, Italy, Ireland and Austria.
In a consolidating industry it would also give Comcast a 25 per cent boost to its revenues.
So Comcast bids for Sky, even if it takes a further sweetener to the bid beyond the current £22 billion, because they want it most and would benefit disproportionately from such a deal. And they also seem happy to support Sky News, another tricky problem solved.
For Rupert Murdoch the immediate future looks uncertain. The great disrupter has had his well-laid plans thoroughly disrupted.
Murdoch, who has always wanted all of Sky may now have to settle for the 39 per cent he already holds, but with the loss of his long-standing effective control in the face of an active, majority shareholder in Comcast.
After allowing the game to run for the next few months Murdoch may decide to fold his cards and take the money and run, considerably richer than he was on Monday.
But it’s all so complicated and uncertain that maybe Rupert Murdoch and his sons should pile into the back of a black London cab.
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