Comcast faces continued doubts over wisdom of Sky purchase

phys.org | 10/9/2018 | Staff
Kaliela101 (Posted by) Level 3
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As it prepares to take control of British telecommunications company Sky following a tense, months-long bidding war, American cable giant Comcast faces continued doubts about its strategy for content and technology—and whether it will pay off.

"We wish Comcast had not acquired Sky," analysts with the New Street research firm wrote Friday in a note to investors. "We wish they had walked away" when it became clear Comcast would have to pay £30.6 billion ($40 billion) to beat a rival bid from Rupert Murdoch's 21st Century Fox for a controlling stake in Sky.

New - Street - Analysts - Comcast - Fight

New Street was not alone. Most analysts appear to agree that Comcast went too far in its fight for control of the British group, even if it is one of Europe's most profitable and powerful TV companies.

"Whether or not they've overpaid, you really have to ask: What was the alternative?" Zach Fuller, an analyst with MIDiA, told CNBC. "There are so few of these media assets" still available to growth-oriented companies like Comcast.

PR - Disaster - Comcast - Deal - Favor

"This would have been an absolute PR disaster for Comcast had the deal not gone in their favor," he added. "They needed to prove that they could grow beyond their US pay-TV contingent."

In recent years, cable operators and Internet giants have been in an accelerating race for growth, particularly over content, to ensure their survival against the overarching threat posed by Netflix.

Acquisition - Sky - Comcast - Gains - Company

With the acquisition of Sky, Comcast not only gains the British company's library of original programming—something Sky spent £7 million on this year alone—but also important sportscasting rights, notably of the English Premier League soccer championship to the British market.

But beyond content, "it seems as though they would like investors to forget that it is also a satellite TV provider, and satellite video distribution is increasingly becoming obsolete," MoffettNathanson analysts said.

Netflix

'Their own Netflix'

In several European countries,...
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