Comcast may have found a way to disrupt Walt Disney Co.'s plan to buy most of Twenty-First Century Fox: topping Fox's bid to buy the British satellite broadcaster Sky with its own $31 billion takeover offer.
The bid, announced Tuesday, seizes upon Twenty-First Century Fox's difficulties buying the piece of Sky that it does not already own. British regulators have expressed repeated concerns about giving Rupert Murdoch and his family more control over the country's media, stretching the approval process out over more than a year and forcing Twenty-First Century Fox to offer more concessions.
Comcast has said that buying Sky would help it expand in Europe, where the broadcaster has 23 million customers and owns rights to show the English Premier League and other professional soccer leagues. Disney, too, has been keen on expanding internationally, with the British company serving as an important part of its $52 billion plan to buy a significant portion of Twenty-First Century Fox.
Whoever prevails, it will shake up Disney's plans. Either Twenty-First Century Fox will have to pay more for Sky, or Disney will lose a valuable international property to Comcast.
In a statement, Twenty-First Century Fox said that it "remains committed to its recommended cash offer for Sky," which it made in 2016.
Disney, Comcast and others are rushing to strike major deals in a swiftly changing media landscape. AT&T has bid more than $85 billion to take over Time Warner, a proposed merger that the Justice Department is attempting to block. Consumers increasingly stream their movies and television shows over the internet. Upstart technology companies such as Apple and Amazon nurture ambitions to rival Hollywood's big studios. Online broadcasters are even increasingly bidding for the rights to show sports — long a major moneymaking business for traditional broadcasters and cable operators.
The saga over Sky has been one of the most drawn out deal-making dramas in media.
Murdoch, the Twenty-First Century Fox executive chairman, has tried for years to take full control of the broadcaster, which he started in 1989. By owning the rest of Sky, Twenty-First Century Fox would be better positioned to take on the likes of Netflix, Amazon and other streaming giants.
In 2011, Murdoch was forced to withdraw a $12 billion offer for the rest of Sky as a firestorm erupted over phone hacking by the news media in Britain. The scandal eventually led to the closure of the News of the World, the first newspaper Murdoch acquired in Britain in the late 1960s.
In December 2016, Twenty-First Century Fox tried again, in an effort to expand its global reach and cement Murdoch's legacy. The company agreed to buy the 61 percent of Sky that it does not own for about $16 billion.
While the Office of Communications, or Ofcom, ruled in June that Murdoch and other company executives were "fit and proper" to hold broadcasting licenses in Britain, it also said that the deal warranted more scrutiny. In the regulator's view, the sexual harassment scandal at Fox News had amounted to "significant corporate failures."
Then last month, Britain's competition regulator provisionally rejected the deal, saying that it was "not in the public interest."
The regulator said it was concerned that the deal would give the Murdoch family "too much influence over public opinion and the political agenda." It noted at the time that Murdoch-controlled outlets, which include the newspapers The Sun and The Times of London, were already consumed by nearly a third of Britain's population.
In hopes of winning over regulators, Twenty-First Century Fox has offered to establish a "fully independent" editorial board for Sky News and to continue to fund the Sky News brand following the transaction for at least 10 years.
Twenty-First Century Fox had hoped to complete the Sky deal before the Disney sale was finalized. But Comcast's move just adds uncertainty to an already complicated process.
Disney, which declined to comment on Comcast's proposal, must now decide how much it cares about Sky. It is also not clear if Disney would want to end up being partners with Comcast, in the event that Comcast wins majority control of Sky and Disney ultimately has Fox's 39 percent stake.
While announcing the planned purchase of Fox's entertainment assets in December, Robert A. Iger, Disney's chief executive, singled out Sky as "a real crown jewel" in a television interview with Bloomberg. "We certainly would be looking forward to the opportunity to have Sky be part of our company," he said.
Comcast has circled Twenty-First Century Fox in the past. Last year, the cable giant was in preliminary talks to buy the entertainment assets owned by Twenty-First Century Fox, including the minority stake in Sky. Disney ultimately prevailed.
At the very least, Comcast has likely made it more expensive for Twenty-First Century Fox to buy all of Sky. Under the terms of its proposed bid, Comcast said it would pay 12.50 pounds, about $17.50, a share in cash. That would represent a premium of 13 percent over its closing price Monday and is about 16 percent above Twenty-First Century Fox's current offer of 10.75 pounds.
On Tuesday, shares of the British broadcaster jumped by nearly one-fifth. The stock surge suggested investors expected Twenty-First Century Fox to back away or come back with an even better offer.
Comcast shareholders seemed less pleased. The company's stock price dropped more than 6 percent in midday trading, to about $37. Disney shares fell 4 percent, to about $105.50, and Fox shares declined 2.6 percent, to about $37.80.
An influential media analyst, Craig Moffett, who follows Comcast for MoffettNathanson, wrote in a research note that the Sky offer had positive aspects, including offering Comcast's entertainment unit, NBCUniversal, broader distribution in Europe.
Still, "Comcast will have to twist themselves into knots to explain why satellite distribution won't be just as obsolete in Europe as it already is in the U.S.," Moffett said. "Perhaps worst of all, this morning's bid doesn't really put to rest the idea that they might still try a topping bid for Fox's U.S. assets, including the rest of Sky" if the Justice Department ends up approving AT&T's takeover of Time Warner.
"The notion that Comcast might make a topping bid for Fox has weighed heavily on Comcast shares," he added.
For either Comcast or Disney, Sky offers a platform for international expansion.
Comcast said in a statement that about a quarter of its revenue would come from international operations should it seal a deal with Sky, up from 9 percent currently. In addition to its other businesses, Sky has also announced plans to start streaming services in Spain and Switzerland.
"We look at Sky as a media company: Sky News, Sky Sports, Sky Movies," Brian L. Roberts, Comcast's chairman and chief executive, said on a conference call with analysts. "There's tremendous presence in the content creation, not just the distribution."
In a research note Tuesday, Polo Tang, a UBS analyst, said that Sky could be "strategically interesting" to a variety of bidders, given its content and its broadcast and streaming distribution network. It also recently retained the rights to the Premier League at a lower cost than analysts had expected.
Tang said that the benign outcome of the Premier League auction potentially "gives Fox scope to raise its offers."
Comcast said that it is seeking control of more than half of Sky's shares with Tuesday's offer but that it is ultimately interested in acquiring all of the British broadcaster.
In a statement, Sky urged shareholders to take no action yet. The broadcaster added that its independent directors "are mindful of their fiduciary duties and their obligations under the U.K. Takeover Code."