Comcast blinks first in bid for 21st Century Fox as it focuses on Sky

COMCAST has backed down in its Hollywood battle-royal with the Murdoch dynasty and Disney over 21st Century Fox, saying it will instead focus on its attempt to conquer Europe with a £26bn takeover of Sky.

America’s biggest broadband operator, which also owns the television network NBC and Hollywood studio Universal, conceded defeat in a bidding war for most of Fox’s assets.

It leaves Disney’s $71bn (£55bn) offer, which has been agreed by the Fox board, unopposed ahead of a shareholder meeting next week. Comcast’s move was interpreted as a potential attempt to sue for peace in a complex transatlantic conflict over the future of media.

It came days after the three moguls at the centre of the battle crossed paths at a high-powered media conference in Sun Valley, Idaho.

Investors betting on a further escalation on the British front were disappointed and Sky shares fell back 1.5pc to £15.09, indicating lower confidence that Comcast’s current offer of £14.75 per share will be improved upon.

It left a prediction by the hedge fund manager Crispin Odey that bidding for Sky will reach £18 per share looking optimistic.

Comcast’s retreat came after US competition watchdogs said they would appeal against a court defeat last month that approved the takeover of Time Warner, another media giant, by broadband rival AT&T. The announcement by the Department of Justice ratcheted up the risk of US government opposition to what would be a broadly comparable deal between Comcast and Fox. Disney’s plans have already won approval on condition it spins off some sports channels.

Comcast’s debt-fuelled bid to gatecrash Rupert Murdoch’s exit from global entertainment has not been entirely unsuccessful, however.

It forced Disney to sharply increase its offer from an initial deal at $52bn and borrow cash to fund what had been planned as an allshares takeover.

Brian Roberts, chairman of Comcast and head of the dynasty that controls it, conceded with congratulations for Disney chairman Bob Iger and the Murdoch family for “creating such a desirable and respected company”. The deal will add Fox’s film and television studios, its US cable channels and its international businesses to Disney, which is already Hollywood’s most powerful producer due to the success of Pixar, Marvel and Star Wars films.

Disney will also take control of Fox’s 39pc stake in Sky.

Mr Iger has labelled the pay-tv operator and its 23 million customers across Europe a “crown jewel” in the deal as he attempts to build a new streaming service to compete with Netflix around the world.

Comcast said it will now “focus on our recommended offer for Sky”.

Disney could yet seek, via Fox, to walk away with everything and increase its offer for Sky. It must make a decision by mid-august.

Mr Roberts will hope that Mr Iger will be satisfied with victory in the United States, not want to take on more debt and opt to sell him Fox’s stake in Sky.

A third scenario is also possible. Comcast’s takeover of Sky requires approval by only half of Sky shareholders. Disney could opt to remain a large minority shareholder as it seeks international partners to help it challenge Netflix.

In the US it is due to become the majority shareholder in Hulu, a popular streaming service, with Comcast as the junior partner.