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Sky illustrates takeover appeal with strong financials

European pay-television broadcaster Sky has today (Thursday) reported a five per cent increase in group revenues in its annual financial results, as US media companies 21st Century Fox and Comcast continue their battle to secure control of the operation.

Sky’s financial results for the year ending June 30, 2018 saw group revenues increase by £588m (€662.1m/$777.3m) to £13.585bn, with growth in each core market. In the UK and Ireland, revenue rose by four per cent to £8.931bn, while Italy (£2.631bn), along with Germany and Austria (£2.023bn), delivered increases of six per cent apiece.

Statutory operating profit for the year of £1.034bn also increased by seven per cent from last year’s figure of £964m. Sky said this was due to five per cent growth in statutory revenue, progress in operating efficiency and the movement in foreign currency exchange rates.

Commenting on the results, Sky chief executive Jeremy Darroch said: “We enter the year ahead with good momentum. We have an excellent set of plans and we’re focused on executing them well. We are proud that Sky is recognised globally as an outstanding business and are confident we have the right assets and capabilities to continue creating long term growth opportunities and to capitalise on the strong position we’ve built.”

Sky’s strong financial results serve to underline its appeal to its current suitors. Comcast last week announced it would end its pursuit of the assets 21st Century Fox has agreed to sell to the Walt Disney Company in favour of concentrating on its takeover bid for Sky.

Comcast earlier moved swiftly to counter the enhanced takeover offer submitted by 21st Century Fox for Sky by entering a new bid to exceed that of its rival company. Comcast’s move came just hours after Fox announced its improved offer and intensified the race for control of Sky. Comcast’s new offer for the entire issued and to be issued share capital of Sky is worth £14.75 per share, valuing the broadcaster at approximately £25.9bn.

Fox’s new offer of £14 per share values Sky at £24.5bn and came after Comcast in April announced a superior cash proposal to acquire Sky, which is operated by 21st Century Fox. Comcast’s offer is for all of Sky, while Fox, which already owns 39 per cent of the broadcaster, is seeking to secure full control of the company by acquiring the 61 per cent stake it does not already hold.

Comcast had been engaged in an equally significant takeover process in the US, involving Fox. On June 20, Disney tabled an improved $70.4bn (€61bn) takeover offer for a significant share of 21st Century Fox’s business assets.

The amended transaction agreement marked a considerable increase on the $52.4bn deal sealed with Fox in December and came after Comcast earlier submitted a counter-bid of $65bn.