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Comcast Mulls Over Sky Buyout to Gain 21st Century Assets

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Per a recent Bloomberg report, Comcast Corp (CMCSA - Free Report) is eyeing the takeover of Sky plc (SKYAY - Free Report) — a U.K.-based broadcasting company and European pay-TV provider.

Comcast considers Sky’s technological assets superior than other pay-TV providers in Europe. Moreover, the assets will complement Comcast’s X1 platform, Xfinity-branded X1 set-top boxes and wireless services.

Comcast’s planned takeover of Sky is a counter measure against The Walt Disney Company’s (DIS - Free Report) attempt to acquire some of the assets of 21st Century Fox Inc (FOXA - Free Report) . Currently, 21st Century Fox holds around a 39.14% stake in Sky. The company has reportedly placed a $15-billion bid for the takeover.

Multiple Bidders

Notably, Comcast and Walt Disney held talks with 21st Century Fox to acquire the mass media company’s assets. These assets include movie and TV-production studios, FX, National Geographic as well as international assets such as the Star network in India and Sky.

U.S. telecom behemoth, Verizon Communications also approached 21st Century Fox about potential acquisitions. However, details regarding the deal were not revealed.  

Another development was witnessed, when office heads of Comcast and 21st Century Fox held a meeting in New York.

Considering these factors, it is uncertain about who will get 21st Century Fox’s assets.

Moreover, regulatory authorities are quite stringent about mergers leading to power consolidation in a single company. The pending $85.4-billion deal between AT&T and Time Warner was delayed because of regulatory issues. The companies have recently extended the deadline of the deal to Apr 22, 2018 to receive the requisite regulatory approvals.

Bottom Line

The convergence of the telecom, cable TV and media industry has been gradually growing in the last few years. Massive adoption of smartphone and tablets along with continuous development of super-fast data transfer technologies are key drivers of the convergence. The improving economy is driving demand for real-time voice, data and video. Since cord-cutting is affecting the cable-TV industry, media companies are planning to join operations with telecom giants.


Zacks Rank

Sky is currently a Zacks Rank #2 (Buy) stock, Comcast carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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