CMCSA Comcast Corporation

By Erich Schwartzel 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 24, 2018).

LOS ANGELES -- Walt Disney Co. didn't win Sky PLC as part of its acquisition of 21st Century Fox Inc. assets, but the end to the unusual bidding war leaves rival Comcast Corp. paying a sum that will benefit Disney as a minority owner of the British pay-TV operator.

Comcast's victorious $38.8 billion bid for Sky on Saturday complicates Disney's companywide direct-to-consumer strategy, and leaves the company without an asset that Chief Executive Robert Iger once called a "crown jewel" of the Fox acquisition.

The outcome may please some on Wall Street. As the contentious bidding war between Comcast and Disney over the entirety of Fox assets heated up over the summer, some analysts grew nervous as the deal's price increased to $71 billion. Though Disney's balance sheet is seen as strong, unloading Sky, they argued, would make the acquisition easier to stomach.

Disney didn't immediately respond to a request for comment after bidding ended on Saturday.

Despite some calls to "split the baby" and leave Sky to Comcast, Mr. Iger fought on, taking the Sky bidding war to this weekend's unusual finish. Though Mr. Iger's tenure at Disney has been marked by high-profile acquisitions such as Pixar Entertainment and Lucasfilm Ltd., he has never before had to contend with a messy public bidding war on the scale of Comcast's pursuit of Fox and Sky.

When the Fox deal was first announced, Mr. Iger praised Sky's business and seemed determined to win it as part of a larger goal of controlling distribution platforms in the direct-to-consumer streaming age. Disney is doubling down on streaming services and will become a majority owner of Hulu once the Fox deal closes.

Now, Disney must continue with this strategy without a TV operator that would have given it an immediate presence in more than 23 million homes.

The company is mounting a streaming service of Disney programming, set to launch in late 2019, that is entering a crowded field of competitors dominated by Netflix. The service's European launch would have had a major advantage had Disney scored Sky.

Winning Sky would also have expanded Disney's presence in Europe at a time when most of the company's international focus has been on China. Mr. Iger has said getting Sky would have increased his company's share of foreign revenue to 40%, from 24%.

Write to Erich Schwartzel at erich.schwartzel@wsj.com

(END) Dow Jones Newswires

September 24, 2018 02:47 ET (06:47 GMT)

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