Roberts: All Satellite Isn’t Equal

Comcast chairman and CEO Brian Roberts said he believes the European satellite TV business is growing and has the potential to grow more, in stark contrast to U.S. satellite TV companies that have seen their business erode rapidly.

Comcast surprised the Street when it announced its bid for British satellite giant Sky, an attempt to out-fox 21st Century Fox’s own offer for the company. Fox owns a 39% stake in Sky and has been trying for months to acquire the remaining 61% of the company, but has faced some push back from U.K. regulators.

Investors didn’t seem too pleased with the prospect of a mogul war between Roberts and Fox’s Rupert Murdoch, who likely will up his bid for the satellite company in response. Comcast shares were down 4.1% ($1.60) to $37.98 each in early trading Tuesday. Fox shares were down less than 1% (29 cents each) to $38.52 in early trading.

In a statement, Fox said it remains committed to the offer it made for Sky on Dec. 15, 2016.

"We note that no firm offer has been made by Comcast at this point," Fox continued. "A further statement will be made if appropriate."

On a conference call with analysts to discuss the Sky bid, Roberts said despite the declines in the domestic satellite TV market, he believes the European satellite business is on a growth trajectory.

For the six months ended Dec. 31, Sky added about 365,000 new customers to its services in the U.K., Germany and Italy.

“I think it's apples and oranges,” Roberts said on the call. “From our vantage point, and for their track record, the results they just reported, there is no comparison to the satellite operator in U.S. “

Roberts added that the U.S. product is not as good as Sky, has a different competitive set and is bundled with broadband service from other providers.

“They have a pretty complete company,” Roberts said. “They’re also in an incredible and enviable position as a content aggregator, whether it’s their own content that they create, which maybe they should do more of, we’ll see overtime to the premier content they deliver to their customers. Their business has been growing, they are able to go into the over- the-top world with their Sky Now product, they can go into other markets through wireless and broadband-only, they do bundle mobile and broadband as part of their appeal to consumers. We think it’s just more like Comcast and NBCUniversal than any company we’ve seen.”

Roberts likened the Sky bid to Comcast’s purchase of NBC Universal in 2011

“Think back to the day we announced NBCU and how different 7 years later we are then we were then,” Roberts said. “People are loving content, how and where and why and how you monetize it is changing and different companies are reacting differently. What can we do together that couldn’t do alone? Stay tuned. But look at our track record. I think we look at this and say it’s a great fit.”

But the deal still has to be accepted by Sky and Fox, although it hasn’t said anything publicly at press time, is likely to make a counter offer. Roberts said on the call that he would be willing to accept 50% plus one share of Sky instead of full ownership. That could mean that Fox could keep its 39% stake in the company or transfer it to Disney as part of its overall deal to sell certain assets. Sky was believed to be an integral part of that deal, so it is still uncertain whether a Comcast win on the Sky front could throw a wrench into that deal. Comcast has been rumored to be assembling a deal for Fox’s other assets, but Roberts declined to comment on any speculation during the call.