Sky owner Comcast announces plan to split
Comcast, the US media behemoth which owns Sky TV, has announced plans to split in two.
The deal comes just as Sky is agreeing terms of a multi-billion-pound acquisition of part of ITV, which would unite the UK’s biggest pay-TV provider with the channels and streaming platform of its dominant free-to-air service.
London traders looked unperturbed at the implications of the news from the US for the UK firm. Shares in ITV were up 1 per cent in afternoon trade at 83p.
The stateside deal is expected to take a year to complete. It will separate out Comcast’s media and technology businesses into separate entities.
One, NBC Universal, will be home to its television, film and theme park operations, including TV streaming on the Peacock platform, and Sky.
The other, Comcast, will house the broadband and mobile operations, as well as what the firm called “entertainment platforms”, or its cable-TV business in the US. Monday’s fresh deal comes just months after Comcast separated off much of its cable operation into a new and separately listed firm called Versant.
Monday’s unveiling of the “tax-free” spin-off of NBC Universal and Sky will create two independent publicly traded companies “each with significant scale, strong financial profiles and distinct strategic opportunities” according to the deal announcement today.
In pre-market trading, shares in Comcast strode higher by over a fifth.
Snapping up ITV
But Monday’s announcement of the NBC Universal split comes after a prolonged decline for Comcast’s stock. The shares are down almost 30 per cent over the last year.
Sky is in the process of defining the exact details of its offer part of ITV, the UK’s biggest free-to-air broadcaster. The deal, worth around £1.6bn, is for the London-listed firm’s terrestrial broadcast channels and its streaming service ITVX.
ITV’s Studios business – which makes programmes such as Coronation Street and I’m A Celebrity – will not change hands, continuing as a going concern. Alongside regulatory scrutiny of the sale, the process of separating out the ITV businesses from each other is underway.
The announcement of the change in ownership of Sky’s US parent has come in the middle of that process, which industry sources say is complex and likely to be lengthy.
The broadcasting and entertainment industry is no stranger to blockbuster deals, and multi-billion near-miss offers. Its tangled ownership story has been complicated by renewed competition for viewers from social media, with the rise of alternative platforms from YouTube to TikTok challenging revenue streams and fragmenting audiences.
Comcast, historically a major cable TV provider in the US, was rebuffed when it made a hostile, $41bn bid for Disney in 2004. Its strategy of making acquisitions stoked concern about media ownership becoming over concentrated amid so-called “vertical integration” of cable firms and programme-making companies.
Times have changed since the deal making bonanzas of previous decades, with the rise of the internet creating waves of consolidation.
A new chief executive
Comcast took control of Sky as majority owner of the UK’s biggest pay-TV provider in 2018. It bought the Sky shares held by 21st Century Fox, which was then controlled by Rupert Murdoch. The media tycoon went on to sell his stake in 21st Century Fox to Disney in 2019.
After the Comcast / NBC Universal separation, Mike Cavanagh will be the chief executive of NBC Universal.
Comcast’s former chief financial officer, Michael Angelakis, will become the chief executive of Comcast.
Current group chief executive Brian L. Roberts will “continue to be actively involved in the leadership of Comcast and NBCUniversal, working in partnership with the chief executives of both companies” the group said today.
He called it “a very exciting day for our company”, adding:
“The transaction we are announcing will unlock a more entrepreneurial management approach and open up a multitude of new opportunities for each business.”