Sector movers: Media rumbles as Sky bid skirmish expected

The media sector was the highest riser on Tuesday, led by a 20% rise for Sky's shares as US cable network Comcast tabled a rival bid to that agreed with 21st Century Fox.

Comcast tentatively offered 1,250p per share for the British outfit, trumping Fox's offer of £10.75 per share and valuing Sky at $31bn (£22.1bn). Sky's shares shot up 20% to 1,330p, with the market seemingly expecting that Rupert Murdoch's Fox and Disney will be forced to come back to the table with their own revised offers.

Analysts at Olivetree Financial said all signs point to Comcast's bid for Sky being "genuinely in competition with Fox & Disney", with the market "right to be pricing in real competitive tension now". Comcast's bid should be very 'clean' from an antitrust point of view, with the 50% acceptance showing that they are happy to own the asset alongside Fox / Disney. "Whether Fox/Disney are happy to do the same remains to be seen."

ITV was also higher, lifted by M&A hopes on the back of the bidding war.

Elsewhere in the sector, Barclays upgraded Ascential to 'equal weight' a day after the events and business information group's results saw better-than-expected 2018 guidance and raised the possibility of more portfolio changes.

Analysts were impressed by management's confidence for better organic growth in 2018, hopes for Cannes Lions of "only a fairly modest year-on-year decline" and a strategic review of the exhibitions unit that "could create new headroom for inorganic reinvestment". A sum-of-the-parts (SOTP) price target was lifted to 395p.

Pearson was also lifted by broker comment, as Citi reissued its 'buy' rating on the stock, without making any meaningful changes to its underlying assumptions. "We think the market has been too cautious on the long-term prospects of the US higher ed business and focused too much on it to the detriment of other parts of the business. We wouldn’t say the group is out of the woods yet, but to the extent these results showed the higher ed business is smaller in the mix than many expected and with core leverage almost nil, we came away encouraged."

Personal goods was the worst performing sector, having been the best the day before. Unilever and PZ Cussons, having driving the rise on Monday, were both down on Tuesday.

Top performing sectors so far today

Media +2.63%
Industrial Metals & Mining +2.50%
Financial Services +1.05%
Industrial Transportation +0.82%
General Industrials +0.56%

Bottom performing sectors so far today

Personal Goods -1.81%
Tobacco -1.34%
Real Estate Investment Trusts -1.29%
Real Estate Investment & Services -1.27%
Food Producers & Processors 7,514.95 -1.20%