Walt Disney Co. is getting some serious competition in its effort to acquire 21st Century Fox's movie and television assets: Comcast Corp.
Comcast confirmed Wednesday that it is in the advanced stages of preparing an all-cash counteroffer that will top Disney's $52.4-billion stock bid. The power play could determine which media company -- Disney or Comcast -- will end up being the dominant player in Hollywood.
"While no final decision has been made, at this point the work to finance the all-cash offer and make the key regulatory filings is well advanced," said the Philadelphia-based company, which controls cable systems and NBCUniversal, which includes Universal Studios. Even before Disney announced its plans to acquire 21st Century Fox's movie and TV production assets and its entertainment cable channels, Comcast had been lurking in the background as a potential rival.
Last fall, Comcast Chief Executive Brian Roberts met with Fox Chairman Rupert Murdoch to discuss such a union -- but Murdoch was cool to Roberts' overture.
Fox executives ultimately rejected that Comcast bid, believing that the chances of regulatory approval were better for Disney, which wants to bolster its TV and movie holdings for its direct-to-consumer streaming services. In addition, the Disney offer would turn Fox shareholders -- including Murdoch and his family -- into Disney shareholders. The Murdoch family would become one of Disney's largest individual shareholders, with about 5 percent of the company's stock.
Comcast is offering cash, in part because it does not want to dilute the stakes of Roberts and his family. There would be considerable tax considerations should Fox opt for the all-cash deal from Comcast.
Fox clinched the Disney deal soon after the government brought a lawsuit to block AT&T Inc.'s acquisition of Time Warner Inc., which includes HBO, CNN and the Warner Bros. movie and television studio.
But since then, there have been signs that the regulatory climate might be more favorable. Analysts believed that the Department of Justice failed to prove its case against AT&T during a two-month trial that played out in Washington this spring. The judge is expected to rule by June 12.
If AT&T is allowed to buy Time Warner, the government probably would not step in to block a Comcast-Fox deal.
Comcast is not interested in waiting around -- particularly now that Disney and Fox are making plans to ask their shareholders to approve the Disney-Fox deal. Comcast CEO Roberts is preparing a second offer at around $60 billion, according to knowledgeable people who were not authorized to discuss Comcast's internal deliberations. Last fall, Comcast's bid for Fox was 16 percent higher than what Disney offered.
A new Comcast bid would be a direct challenge to Disney Chief Executive Bob Iger, whose effort to buy much of Fox was seen as a bold move to cement his legacy and secure Disney's future. The Burbank entertainment conglomerate now might have to raise its bid for Fox considerably.
Murdoch, too, would be in a tight spot because he would have to justify to shareholders accepting a lower amount when Comcast was offering more money.
Business on 05/24/2018