44.70 +0.05 (0.11%)
Pre-Market: 8:00AM EDT
|Bid||40.57 x 4000|
|Ask||44.80 x 800|
|Day's Range||44.04 - 44.67|
|52 Week Range||24.30 - 49.65|
|PE Ratio (TTM)||18.57|
|Forward Dividend & Yield||0.36 (0.82%)|
|1y Target Est||45.00|
Shares of Comcast Corp. fell Monday after the cable company won a bid over the weekend to gain control of European pay-TV giant Sky PLC. Comcast’s offer of £17.28 ($22.59) a share surpassed 21st Century Fox Inc.’s highest bid of £15.67 a share after three rounds of bidding Saturday, in a rare auction held by British regulators. Comcast’s winning bid, valued at $38.8 billion, was up 40.1% above its initial bid of £12.50 a share in February and Fox’s initial £10.75-a-share bid in December 2016.
21st Century Fox (NASDAQ:FOX) looks like a loser today, but as Bob Dylan wrote many years ago, the loser now is later to win. Comcast’s (NASDAQ:CMCSA) victory over Fox in the battle for Sky (OTCMKTS:SKYYY) will cost it $39 billion, and the company hopes to complete that deal in October. This is compounded by the fact Disney owns 39% of Sky through Fox stock, making it harder for Comcast to win a majority vote of Sky stockholders to approve the deal. Add in Sky (Fox owns roughly 40% of Sky, which is $15 billion), and the result values Fox, in cash and Disney stock, at about $86 billion, minus the debt Disney inherited from Fox.
Shares of Disney (DIS) and Netflix (NFLX) surged Monday for completely different reasons. Yet their climbs highlight how important the streaming industry is and helps set up what will likely be years of comparison between the two media powers.
Moody's Investors Service ("Moody's") says Twenty-First Century Fox, Inc., parent of 21st Century Fox America, Inc. (Baa1, on review for upgrade) lost in a one-day final auction for Sky plc (Baa2, developing outlook), after a final round sealed bid losing to Comcast Corporation (A3, stable) by a considerable margin, and with the Sky board recommending that shareholders tender their shares to Comcast. Since The Walt Disney Company (A2, on review for downgrade) is in the process of acquiring the majority of Fox's assets (including its stake in Sky) for $70.4 billion in stock, debt-financed cash plus the assumption of Fox's debt, Disney in effect lost in the auction for Sky as well.
Disney (NYSE:DIS) has been in competition with Comcast (NASDAQ:CMCSA) over buying assets from Twenty-First Century Fox (NASDAQ:FOXA) for a while. This morning, we learned the final result and Comcast prevailed in the bidding process. Disney stock is rallying on the news … and therein lies an opportunity.
Just a few short months ago, Comcast Corporation (NASDAQ: CMCSA) conceded in the race for Twenty-First Century Fox (NASDAQ: FOXA) assets and redirected its focus to British media conglomerate Sky Plc. (OTC: SKYAY). The downgrade is driven largely by a relatively high new pro forma valuation and an expected increase in competitive pressure from new technology, Horan said in the Monday downgrade note. One key valuation driver surrounds 5G wireless and its competitive threat to wireline broadband, Horan said.
In the fiscal year to the end of June, Sky had revenue of £13.59 billion and a pretax profit of £864 million. Comcast is an American cable juggernaut that owns NBCUniversal as well as the Xfinity cable and telecommunications service. Fox is an American TV and entertainment group that owns a 39% stake in Sky.