It was recently announced that Comcast had outbid Rupert Murdoch’s 21st Century Fox in the battle for Sky, with Comcast offering $30bn to take full control of the broadcaster. Comcast is a major force in the US and beyond. It is a global telecommunications conglomerate owning a large cable TV and internet business, creating their own content through NBC Universal, which owns the NBC TV network and Universal Studios.
It is thought that Comcast wanted Sky and its 23 million subscribers to help them compete against new streaming competitors like Netflix and Amazon, especially with the market in the US dwindling. If combined, Comcast and Sky would become the biggest provider of pay TV (cable, satellite and telecom TV services) in the world, with 52 million customers.
All Response Media viewpoint
Comcast had to borrow $27bn to fund their $30bn bid for Sky, which is a lot of money that the company will want to see returned. One way to do this would be to increase subscription prices, but it’s a risky move that could send customers packing. However, the deal is not all bad news for Sky customers as there is potential for Comcast content to be shared across the wider Comcast group. Although Sky has deals with several Hollywood libraries, the platform could benefit from access to additional archives of US film and TV programming, which NBC Universal offers.
Anything that slows the growth of online content providers and helps retain viewers of linear TV is good news for broadcast advertisers. Sky deliver the largest share of UK adult commercial impacts (BARB, January to August 2018). A reduction in Sky customers, driven away by increasing subscriptions, towards other content providers such as Netflix and Amazon would have a negative impact on overall TV viewing and the linear TV marketplace.
Sky is a crucial sales house for driving direct response TV (DRTV) and is already oversubscribed as more advertisers are tuning in to the benefits of DRTV. The number of response advertisers on Sky is growing and has almost doubled since 2014; further reduction in Sky viewers would cause even more pressure on this key response sales house.