On Sept. 22, 2018, Comcast Corp. (CMCSA) won a bidding war for Sky Plc (SKYAY), making an offer of $39 billion. Comcast beat out offers from other media giants like 21st Century Fox (FOXA) and The Walt Disney Co. (DIS), and, in doing so, ending a long process that had started back in December of 2016.
Comcast is a cable provider based in Philadelphia, and London-based Sky is Europe’s largest satellite broadcaster.
The final bidding took place on a Saturday in a London hotel room. United Kingdom regulators oversaw the end of the auction, and Comcast emerged as the winner after offering 10% more than Fox, which is in the process of selling its entertainment assets to Disney. Comcast bid £17.28 per share compared to Fox’s offer of £15.67 per share.
The television industry is currently enduring a period of disruption as streaming services like Netflix cut into both subscription and advertising margins. Sky is an attractive acquisition target in this environment for several reasons.
First, Sky serves 22 million paying subscribers that represent £2 billion in annual profits. Sky has also launched successful on-demand services, which provide an answer to Netflix and other streaming options. And, finally, Sky owns the rights to Premier League soccer, which is a lucrative brand that is growing worldwide.
Analysts focused on media and telecommunications companies would naturally have been looking for signs of a Sky acquisition. Fox, which owned 39.1% of Sky, made clear at the end of 2016 that it wanted to purchase the entire company. But a series of regulatory interventions, concurrent acquisitions and increased offers thwarted Fox’s attempt at the full acquisition.
Analysts using JetTrack would have been able to monitor the travel of executives from companies known to have an interest in Sky, confirming what parties were remaining actively involved and what parties may or may not have dropped out leading up to the $39 billion deal.
Fox Makes Early Bid to Acquire Sky
As noted above, Fox has long held a 39.1% stake in Sky, and it has long attempted to take full control of the company. Fox might have successfully acquired all of Sky if not for the hacking scandal that engulfed Fox-owned News of the World back in 2011.
In December 2016, Fox again tried to purchase the entirety of Sky, making an offer that valued the full company at £18.5 billion. The United Kingdom referred that offer to Ofcom, a competition regulator, where the bid was held up for more than a year.
While Ofcom scrutinized Fox’s bid, three important things happened. First, Comcast swooped in to make an offer valuing Sky at £22.5 billion. Second, Fox increased its bid to one that valued Sky at £24.5 billion. And, finally, Fox entered an agreement to sell its entertainment-related assets to Disney.
By summer of 2018, it became clear that Comcast and Disney, the soon-to-be owner of Fox’s entertainment assets, had emerged as Sky’s most likely acquirers — and JetTrack allowed analysts to track the two company’s visits to London.
Comcast and Disney Start Visiting London Frequently in 2018
In 2018, Comcast began to visit London with far greater frequency. In fact, JetTrack’s database shows eight visits to London in the days, weeks and months before the Sky auction:
JetTrack’s database includes 3 aircraft wholly owned by Comcast. In 2017, a Comcast jet visited London only once — a flight from Charlotte to London on May 25, 2017.
Feb. 26, 2018: Wildwood, NJ to London (staying 2 days, 4 hours)
March 21, 2018: Philadelphia to London (1 day, 11 hours)
March 21, 2018: Teterboro, NJ to London (21 days, 4 hours)
April 11, 2018: Bolzano, Italy to London (1 day, 21 hours)
June 3, 2018: NA to London (1 day, 21 hours)
June 25, 2018: Millville, NJ to London (1 day, 6 hours)
Aug. 15, 2018: Dundee, Scotland to Brighton, England (21 hours)
Sept. 21, 2018: Cork, Ireland to Farnborough, England (5 days, 6 hours)
That last flight landed in Farnborough just a day before Comcast won the auction to acquire Sky. Using JetTrack, an analyst can also track the four jets wholly owned by The Walt Disney Company. The United States Justice Department approved Disney’s purchase of Fox’s entertainment assets (with conditions) in late June of 2018, and Disney’s jets soon began making frequent visits to London:
Aug. 13, 2018: Galway, Ireland to Yateley, England (Staying 2 days, 22 hours)
Sept. 11, 2018: Santa Cruz das Flores, Portugal to London (12 hours)
Sept. 20, 2018: Abakan, Russia to Farnborough, England (4 days, 18 hours)
Sept. 21, 2018: Donegal, Ireland to London (2 days, 3 hours)
Investors tracking the possible sale of Sky could have used JetTrack to see executives from the two likeliest bidders arrive in London just days before the deal closed. More interestingly, Disney sent two aircraft, a Gulfstream 650 and a Gulfstream 650ER that both seat up to 19 passengers. As noted in previous case studies, a company sending a significant contingent that requires two aircraft may indicate that negotiations have reached a key stage and are drawing close to finality.
JetTrack Helps Investors Track Bidding and Interest Over Time
The sale of Sky was not a secret. Analysts tracking media and telecommunications companies were aware that a deal could close soon, and they no doubt expected that one of Comcast, Fox or Disney might be the ultimate buyer.
JetTrack offers investors a unique way to follow executives from companies involved in long-term bidding for an asset. If an analyst knows that a deal might close soon, JetTrack can pinpoint when and where the executives of likely buyers are traveling. In the case of Sky’s auction, JetTrack indicates that executives from both Comcast visited London regularly throughout 2018, and that Disney executives increased their visits soon after important approvals for the company’s acquisition of Fox’s entertainment assets.
JetTrack can also provide information on how frequent or infrequent visits by a specific company are to certain locations. For example, Comcast executives rarely visited London in 2017, but they began visiting London repeatedly in 2018 in the run up to the acquisition of Sky. Similarly, Disney rarely visited London until its Fox approvals came through from the Justice Department.
The convergence of Comcast and Disney executives provided a strong indication that a deal could close soon. And analysts using JetTrack would have been able to see that convergence and make a play before Sky’s stock spiked with news of the acquisition.
Interested in taking a closer look at JetTrack? Get in touch to learn more.