Comcast and Disney bid for British broadcaster Sky
Auctions have become the center of attention recently, as large companies place bids to acquire companies of other verticals. Most recently, we have seen companies in the technology and media space spend copious amounts to stay competitive in ever innovating spaces. There are many types of auctions that take place when companies bid to purchase other companies, but most common is a first price auction (where all bidders simultaneously submit their closed bid). We have also studied first price auctions in class, specifically how one should bid given their true value.
A story recently in the news has been the bidding of Comcast and Disney (Fox) for ownership of British broadcaster Sky. The two companies have dueled for ownership, submitting their two final bids this past weekend. The article delves deep into the true value of the bids, or what these two companies deem to be the accurate price for such an acquisition, and whether or not they stuck true to these original numbers. As each company continued to bid higher, they both exceed their true values. Inherently, this was a poor choice for both companies, as regardless of the outcome the winner winds up net negative from where they began.