Is the Sky falling in on Britain’s media darling after Comcast’s takeover?

Sky is the crown jewel of Britain’s world-class creative sector. 

When it was sold to US cable giant Comcast in 2018, the price of the deal reached a stupendous £31 billion after a tumultuous three-way battle involving founder Rupert Murdoch’s Fox empire and Disney.

There was a great wave of optimism about the broadcaster’s future, with the new owner, Brian Roberts, raving about Sky technology.

In an interview with the Daily Mail, Roberts, the son of Comcast founder Ralph J Roberts, vowed to ‘do no harm to Sky’ and praised its technology, which he asserted was better than that in the US.

Still up for the job? Sky is still home to hits likes Succession but since its takeover five years ago it has become part of a Comcast weighed down by £74billion of debt

The new proprietors committed to a £3 billion investment in a 32-acre film and video production site with 14 stages at Elstree, Hertfordshire.

The ambition may still be there, but five years on, Sky has become an orphan in the rambling Comcast universe. The US behemoth is weighed down by £74 billion of debt and has vast repayments to make over the next 12 months.

A former executive who knows Sky intimately told me: ‘Comcast paid far too much. It is no longer able to invest in the innovation.’

And, as a result, Sky has ‘lost its mojo’.

Along with the UK’s other big media and telecoms companies, cost-cutting is on the way, with an undisclosed percentage of the group’s 34,000 staff reportedly facing job losses. Being part of a debt-laden, family-controlled media group is not proving as comfortable as when the Murdoch family were at the helm.

Wall Street writer William Cohan wrote recently of Comcast that he saw ‘problems occurring’ because of an ownership structure ‘where the family’s voting power outstrips economic ownership, leading to financially foolish, even bizarre behaviour’.

The overheated, debt-fuelled takeover of Sky, threatening Comcast’s stability, fits into that pattern.

Brian Roberts, CEO of Comcast with Aileen Roberts at the Annual Academy Awards

Comcast’s great hopes of pushing the boundaries of Sky across Europe through the ownership of Sky in Germany and Italy never materialised.

Technological incompatibility, together with the dominance of British production and creative talent, meant the European plan was doomed from the outset.

Instead of adding value, Comcast is seeking to sell off the troubled Sky German arm and relieve its balance sheet of stress.

In the autumn of 2022, it wrote down the value of its European acquisition by a whopping £6.7 billion – triggering a paper loss of £3.6 billion for the group.

The loss of ambition was evident from almost the first day of Comcast’s ownership. The key to Sky’s brilliance under Murdoch had been its willingness to borrow, invest and take risks on new ventures.

Yet soon after taking control, Comcast axed a digital hub in Soho’s buzzing studio quarter in central London, sacrificing a new family of sports and social media channels.

Failure to see the value of new-wave outlets reaching consumers directly through ballooning social media showed a reckless lack of ambition.

That early, minor signal of Comcast’s unwillingness to experiment was an indication that being part of the cable giant, badly affected by so-called cord-cutting – a consumer preference for streaming over subscription services – in the US, was not a great place for Sky to have come back to Earth.

A pointer to distress is the Sky decision to axe half of its football reporting team in a cost-cutting move, after pay cuts were demanded. 

Veteran tunnel interviewer Geoff Shreeves was among those to go, declaring: ‘There’s an old saying that you always have to know the best time to leave even the greatest party.’

The idea of using football as a sacrificial lamb runs counter to everything that Sky stands for.

The huge subscription base for satellite broadcasting was built on Sky’s superlative Premier League coverage and the multi-billion-pound sums it has paid for broadcasting rights. In the most recent Premier League deal, it shelled out £4.2 billion to cover 126 matches for the 2022 to 2025 seasons. 

In May, it added to its domination of coverage by signing a £935 million deal with the English Football League (EFL) to broadcast up to 1,000 games each season from the lower leagues.

There was recognition that streaming would allow access to the games closest to the fan base.

But streaming and new technology has also proved a danger to Sky’s dominance. Amazon has quietly gobbled up some of the lesser Premier League fixtures not snaffled by BT and the DAZN sports platform. Enthusiasm in the US for Premier League football is building, with wall-to-wall coverage of almost every fixture on standard cable channels, weakening Sky’s grip and opening a widow for leakages.

The key to Sky’s success was its willingness, under Murdoch family control, to ignore critics and push ahead with innovation, even when it confounded the markets.

Former chief executive and chairman James Murdoch stood his ground, ploughing resources into new tech such as Sky boxes, the advanced Q box, broadband and capacity to interact with newcomers to the industry, such as Netflix. Other content platforms have since been added.

The pioneering approach and memorable programmes left UK competitors, including the BBC and ITV, playing catch-up with smaller resources.

But Comcast’s unlimited backing is no longer guaranteed, in spite of the launch of new platforms Sky Glass and Sky Stream as it modernises its intellectual property.

And though it has secured Premier League rights, and continues to unveil creative programming, Sky’s ability to compete is falling as its purchasing power is cut.

Comcast asset sales, such as the attempted disposal of Sky Deutschland, are a warning of harder times ahead.

Comcast was ‘driven by hubris’ when it bought Sky, a former Murdoch era executive observed. Now it risks ‘self-harm’.

This post first appeared on Dailymail.co.uk