Scepticism about the likely completion of Twenty First Century Fox’s £11.7bn takeover of Sky (SKY) is rising. The combination of a lengthy Competition and Markets Authority (CMA) investigation and scandalous stories emerging from the newsroom at Fox have sent Sky’s share price south of the 1,075p offer price. The shares traded at 790p before Fox made its bid in December 2016 and analysts expect a rejection of the deal to send the UK media group’s share price at least back down to this price.
But a lonesome Sky may not be as bad as investors currently fear, as demonstrated by a recent first-quarter trading update. In the three months to September 2017, revenues rose 5 per cent to £3.3bn on a like-for-like basis, as 160,000 new customers added 800,000 new subscriptions. The good news is that the growth rate of new customers has picked up, after several consecutive quarters of deceleration.
Attracting those viewers has incurred heavy investment in programmes and sports, including £30m extra for football rights in Germany and big expenditure on popular series such as Riviera and Game of Thrones. But Sky has cut operational costs elsewhere, which helped send adjusted cash profits up 1 per cent, after extracting foreign exchange movements.
