Yesterday, the Walt Disney Company agreed to allow Twenty-First Century Fox to sell its 39 percent share in Sky to Comcast for £17.28 per share, or more than $15 billion. This will reduce the debt Disney would inherit in its acquisition of Twenty-First Century Fox. This investment will also help Disney in its strategy to develop and distribute direct-to-consumer streaming video like the new ESPN+ streaming service launched this April.

Along with that service, Disney and Twenty-First Century Fox each own 30 percent of Hulu, a popular streaming video on-demand service. Comcast also owns 30 percent. When Disney completes the acquisition of Twenty-First Century Fox, it will own 60 percent of Hulu. Comcast will be a minority shareholder. According to the New York Times, Disney plans to use Hulu for marketing Disney shows and films directly to consumers. Hulu has more than 20 million subscribers.

Shareholders from both Disney and Twenty-First Century Fox have approved the sale, and Disney and Twenty-First Century Fox have entered into a consent decree with the U.S. Department of Justice to gain the DOJ’s regulatory approval. The sale of the Fox Sports Regional Networks and other regulatory approvals, including those outside the United States, will also be required. Sky’s Independent Committee has encouraged its shareholders to accept the offer, according to a news release. Comcast hopes to complete the sale by the end of October.

“Along with the net proceeds from the divestiture of the RSNs, the sale of Fox’s Sky holdings will substantially reduce the cost of our overall acquisition and allow us to aggressively invest in building and creating high-quality content for our direct-to-consumer platforms to meet the growing demands of viewers,” said Robert A. Iger, Disney chairman and CEO, in a statement.

In a one-day, three-round auction last weekend, Comcast chairman and CEO Brian L. Roberts beat out Fox and Rupert Murdoch, who bid £15.67 per share, on behalf of Disney, reports the New York Times. With this bid, Sky is valued at about $39 billion.

“This is a great day for Comcast. Sky is a wonderful company with a great platform, tremendous brand, and accomplished management team,” said Roberts. “This acquisition will allow us to quickly, efficiently and meaningfully increase our customer base and expand internationally. We couldn’t be more excited by the opportunities in front of us.” 

Comcast and Sky offer similar products and services. Sky TV, for example, offers different TV packages, broadband internet and mobile service. Sky is one of the largest media companies in Europe, serving nearly 23 million customers in Britain, Germany and Italy.

Insider Take:

Disney continues to forge ahead with its strategy to grow its stable of direct-to-consumer streaming video subscription services. It is started with ownership in Hulu, added ESPN+ and a new Disney-focused subscription service to launch at the end of 2019, according to Variety. In addition to exclusive, made-for-Disney-streaming content, Disney has a host of movies and brands it can move to the service as licensing agreements with other companies expire. According to Iger, the focus for that streaming service will be the core Disney fan. The big question is what does Comcast have planned for this acquisition? How will Comcast use Sky to grow its own media empire?