Show of faith in Britain that may come at a cost
THE sum is simply staggering – £30 billion in what is the biggest investment ever into a UK firm.
The purchase of Sky by America’s vast cable network Comcast – which controls the family of NBC news channels as well as Universal Studios – is also a massive vote of confidence in Britain.
Comcast’s major goal was to capture Sky’s 23 million subscriptionpaying customers across Europe, mainly in Britain, Germany and Italy. Together with 30 million subscribers in its home market, Comcast’s challenge now will be to hold on to this enormous audience at a time when online TV rivals Netflix and Amazon, with vast production budgets, are disrupting the whole media landscape.
Sky’s customers in Britain should suffer no immediate impact from the change in ownership, and may even benefit from a better choice of movies, sports and US dramas. But the high cost of acquiring Sky will almost certainly mean Comcast will resort to raising subscriptions and imposing more one-off charges for special events such as big boxing bouts and blockbuster movies.
Comcast has already vowed to recoup £400million a year through cost-cutting and boosting revenues, but so far it has been short on specifics. The sale of Sky to Comcast will be bitter-sweet for Rupert Murdoch and his family. They have been trying to gain majority control of Sky for more than two years, but were held up by endless regulatory reviews.
They first had to show that the stain of the hacking scandal at the News Of The World had been cleared up. Then, no sooner than this obstacle was passed, Fox News, part of the Murdoch empire’s 21st Century Fox and the market-leading news channel in the United States, had to demonstrate it was ‘fit and proper’ after allegations of sexual harassment and misconduct.
AS PART of the effort to clear a path to the deal, 21st Century Fox and then Comcast each pledged to the media regulator Ofcom and the Government that the highly regarded Sky News channel – which is important to media plurality in Britain – would be unaffected by ownership changes and ring-fenced for ten years.
Even though the Murdoch family lost out in the blind auction which settled Sky’s fate, they will be billions of pounds richer as a result of the deal. And they can draw immense satisfaction from having created a technological jewel which has become one of the most valuable media properties in the world. In a recent conversation I had with Brian Roberts, the chairman of Comcast, he recalled how, when holding his first talks with Sky, he made an unannounced visit to the Westfield shopping centre in west London where there is a Sky outlet.
He described how he had been ‘blown away’ by its advanced Q box – which now sits in countless living rooms across the land – and the flexibility of Sky’s technology, much of which has been designed and built in Britain.
If nothing else, the Comcast bid shows that when it comes to creating world-class digital enterprises, Britain is a world leader, and the political uncertainty unleashed by the Brexit referendum has done nothing to undermine America’s confidence in the UK’s ability to prosper, whether inside or outside the European Union.
The deal also underlines the value of the ‘creative’ sector in the British economy, which now makes up around a tenth of national output – roughly the same amount as high finance and the City of London.
The size of the bid is certain to raise questions about the future of Britain’s commercial terrestrial broadcaster ITV as well as the shape and role of the BBC. Comcast is paying ten times the BBC’s annual licence fee income, demonstrating that the corporation is increasingly becoming a minnow in a fast-changing media world.
But despite such a vote of approval in Britain, there must be some disappointment that yet another made-in-the-UK champion has fallen into overseas hands.