Sky could end up the consolation prize in the battle for Fox. But that doesn’t mean it won’t fetch a blockbuster price.

Shares in the European pay-TV giant, which has received rival bids from Fox and

Comcast


CMCSA 4.02%

this year, slipped almost 2% Wednesday. This followed news late Tuesday that AT&T and Time Warner will be allowed to merge, which was followed by Comcast’s big bid for Fox on Wednesday.

Investors’ sudden caution towards Sky, after heated talk of a bidding war, makes sense in the short run. Now that the U.S. consolidation game is on, neither Comcast nor

Disney

—which has also bid for Fox—has any interest in inflating the value of Sky. That’s because Fox’s 39% in the U.K.-based company is a cornerstone of the assets up for grabs.

Most important, the publicly traded stake in Sky isn’t dependent on which company eventually gets the Fox assets. Comcast’s £12.50 bid for Sky currently tops Fox’s £10.75 bid, which is now backed by Disney. Sky stock, at £13.48, is higher again. Investors are right to anticipate more bidding. Whoever loses Fox will need another defense against the challenge posed by

Netflix

and other internet-based TV platforms. Sky has 23 million customers and a popular streaming service, making it the obvious way for the U.S. media giants to gain a broader international audience for their content.

The risk for Sky investors is that Comcast and Disney avoid a bidding war by agreeing to split Fox’s assets. Sky would likely be a core part of any such deal, as would streaming service Hulu. Comcast has hinted it would be prepared to give up Fox’s stake in Hulu as part of an antitrust settlement, indicating a willingness to negotiate.

Such deals are hard to reach. With Comcast’s bid as a backstop, Sky investors should probably hold tight. The bidding action has shifted to the U.S. for now, but it might not be long before it returns to the U.K.

Write to Stephen Wilmot at stephen.wilmot@wsj.com



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