Comcast Makes Pledges With Formal Bid for Sky

Comcast, if allowed to buy Sky, would maintain Sky News spending for 10 years at a level equal to Sky's FY 2017, set up a Sky News board to maintain its editorial independence for 10 years, keep Sky News' U.K. headquarters for five years and not buy a majority interest in U.K. newspapers for five years. Those are the commitments Comcast made as it said Wednesday it made a $31 billion cash takeover offer. In Comcast's Q1 earnings call, CEO Brian Roberts said the Sky deal will boost Comcast’s strategy of vertical integration of distribution and content while bringing “new and attractive geographies” in an internationalization of NBCUniversal. The 52 million combined customer base of the two companies will allow more investment in programming and technology, Roberts said. The bid signals Comcast belief "the required scale for next-gen media will be enormous," MoffettNathanson analyst Craig Moffett wrote investors. He said the cable business is slowing, but instead of generating cash for investors, cash flows are being "diverted to a high-risk gambit for massive scale in Media." Roberts disputed that. He said Comcast doesn't see Sky as a necessity but was opportunistic because the company became available. He said international isn't a broad strategy for Comcast but Sky fits into its existing vertical strategy, with the added benefit of geographic diversity. Comcast's bid for Sky is seen by many not facing as much regulatory difficulty as Fox's pending bid has (see 1802270011). Comcast said Q1 had revenue of $22.79 billion, up 10.7 percent. It ended the quarter with 21.2 million residential video customers, down 93,000; 24.2 million resident broadband customers, up 351,000; and 10.2 million residential voice customers, down 70,000. Roberts said the video subscriber losses were partly due to increasing competition from virtual MVPDs. He said Xfinity Mobile ended the quarter with 577,000 customer lines. Chief Financial Officer Mike Cavanagh said Comcast sees continued broadband growth due to new home construction in its footprint, to the company expanding its network within its footprint, and from market share gains. Comcast closed at $34.26, up 2.7 percent.