Comcast: ‘Sky a great fit’

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Executives at Comcast have talked up the pluses of the company’s formal binding cash offer of $31 billion (€25.4bn) for Sky, describing it as “a great fit” that provides it with new capabilities, new markets, and other growth opportunities.

Speaking on Comcast’s Q1 2018 Results Earnings Call, Brian L Roberts, Chairman and CEO, said he was excited about the opportunities ahead for the company, suggesting that announcement would further strengthen its successful strategy and momentum. “We love our position owning content and distribution businesses that individually have a great outlook and together make each other stronger,” he told analysts. “We think Sky is an outstanding company that follows this same formula, with a similar business model in new and attractive geographies. We believe Sky, when combined with Comcast NBCUniversal, will create an even stronger and more international business with an increased ability to invest in content and innovation.”

He noted that much like with Comcast NBCUniversal in the US, innovation is at the core of Sky’s culture, and it has a portfolio of attractive content. “A larger combined base of 52 million customers will help support the ability of a combined Comcast Sky to invest more in original and acquired programming and technology capabilities as we strive to deliver truly differentiated customer experiences,” he suggested.

“When opportunities arise from unique timing and company-specific situations, we look to take advantage, while viewing any potential transaction through the lens of both financial and offensive strategic impact,” he advised. “Financially, we evaluate opportunities against alternative uses of capital, including buying back our stock as well as accretion to free cash flow per share, and ultimately, the ability to exceed the cost of capital in a reasonable timeframe. Strategically, we are focused on where we can enhance our position through scale with complementary businesses that provide us with new capabilities, new markets, and other growth opportunities. We think Sky is a great fit when judged against these criteria,” he declared.

Michael J. Cavanagh, Senior Executive Vice President and Chief Financial Officer, said the company expected to complete all regulatory reviews in a timely manner so that Sky shareholders would be in a position to review Comcast’s offer without any regulatory concerns attached. “In terms of the financial and strategic merits of the transaction, let me add to what we have said before. We believe this is a financially attractive transaction. New information in the 2.7 announcement today is synergies estimate of around $500 million achieved through a combination of revenue benefits and recurring cost savings across the combined company,” he advised.

“These are expected to be achieved through optimising Comcast and Sky’s complementary operations with only limited impact on head count expected. We believe those synergies, combined with the strength of Sky’s standalone business, which we’ve spent more time studying, makes this a compelling transaction based on a variety of measures,” he stated.

“To reiterate what Brian [Roberts] mentioned, we evaluate all opportunities against alternative uses of capital. This includes buying back our stock, investments we make in our own business, as well as other inorganic opportunities. Quarterly evaluation is optimising for a range of criteria, including accretion to free cash flow per share and the ability to earn and exceed the cost of capital in a reasonable timeframe. All balanced with potential strategic merits of the transaction. In essence, transactions that are financially sound and put us in an even stronger strategic position are exactly the type of opportunities we engage in and also where we have a strong history of value creation. In this context, we believe Sky is a great fit,” he concluded.


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