Comcast writes down Sky’s value, seeks $1 billion buyer for German business

  • Comcast to buy Sky for $39 billion in 2019
  • Peacock now has over 15 million paid subscribers in the US
  • DAZN making ‘double-digit’ layoffs, but hiring engineers elsewhere

U.S. media giant Comcast is considering a sale of Sky’s pay-TV business in Germany, arguing that the underperforming unit is a drag on UK growth, according to Bloomberg.

The German unit, which also includes operations in Austria and Switzerland, is worth about $1 billion, reflecting its position in Sky’s European business, the report said.

Sky’s revenue fell 14.7% to $4.3 billion in the third quarter, with lower revenue in Italy and Germany offsetting gains in the UK, the company’s biggest market by far. Across the group, the number of Sky subscribers actually increased slightly from the second quarter, up 1.4% to 22,986.

Comcast, which bought Sky for $39 billion in 2018 after a protracted bidding war, has now written down the value of the business by $8.6 billion to reflect inflation and other macro factors that will affect near-term earnings potential Changes in economic conditions.

However, the company said revenue was flat from last year when excluding the impact of currency changes, and was encouraged by the acquisition of 320,000 new users across the business, bringing the total to 23 million. Comcast is also pleased that the number of paid subscribers to NBC’s Peacock streaming service has now surpassed 15 million for the first time.

“At Sky, our teams continue to navigate prudently through difficult and rapidly changing macroeconomic and geopolitical times in the UK and Europe,” said Comcast CEO Brian Roberts. , our company is a leader in a very large and profitable market. Despite possible challenges ahead, we are in an enviable strategic and financial position and our future looks bright.”

One of the reasons for Sky’s performance in Germany and Italy is the presence of DAZN. In Germany, DAZN has already established itself in the Bundesliga rights, while in Italy Sky has been replaced by its upstart rival as the leading broadcaster in Serie A – the two domestic football leagues by far the most important in each market assets.

However, DAZN has faced its own challenges recently and is now refocusing on becoming an all-in-one sports platform that offers not only live streaming but also e-commerce, digital content and betting under CEO Shay Segev.

Deadline reports that the company’s London headquarters will cut more staff as it looks to decentralize its “central” model. The “double-digit” layoffs will primarily affect the company’s engineering and data analytics teams, which will hire new staff in India, Poland and the Netherlands.

DAZN is said to plan to double the size of its engineering team in the next 12 months to expand its global footprint. The company’s executive vice chairman, John Gleasure, will also serve in a non-executive role.

Comcast has been contacted for comment.

SportsPro says…

Sky revolutionized the pay-TV market in Europe when it launched satellite services in the UK, and used the budding Premier League as a way to drive adoption in the early 1990s. The model has been replicated by many other companies around the world, with the former BSkyB gaining full control of Sky Italia and Sky Deutschland in the mid-2010s.

This European footprint offers substantial economies of scale in terms of technology, content and pooled resources, but mainland companies have consistently lagged behind the UK, whose sports media market is second only to the US in size.

Crucially, Sky also has a significant mobile and broadband business in the UK and can cross-sell packages with multiple communications services. This increases revenue and reduces churn.

Germany, which has traditionally been a weak pay-TV market until recently, is quite different. Former state-owned monopoly Deutsche Telekom is a major player in mobile and fixed connectivity, while Vodafone has been expanding its reach through acquisitions and full-fibre joint ventures. Sky Germany may be more valuable as part of a larger communications business than a pure TV provider.

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