Comcast-Disney Bidding War Likely Coming For Fox Assets
On the heels of a federal judge's decision that AT&T's $85.4B acquisition of Time Warner "should not be stopped for competitive reasons, Comcast is expected to make its bid for the 21st Century Fox film and TV studio assets" that Disney has "already agreed to buy," according to Ashley Wong of USA TODAY. Comcast was "expected to wait for the judge's ruling in the Justice Department's suit against AT&T-Time Warner before making a formal bid." The Fox assets up for grabs include a "one-third stake in Hulu" and Fox' 22 RSNs (USATODAY.com, 6/13). In Philadelphia, Bob Fernandez reports Comcast, as early as today, is "expected to offer" $60B for the Fox assets. The potential deal "would be similar to AT&T/Time Warner by combining a cable and internet businesses with TV channels, news, sports, and other entertainment" (PHILADELPHIA INQUIRER, 6/13).
THE PRICE IS RIGHT: The WALL STREET JOURNAL's Elizabeth Winkler writes the AT&T-Time Warner ruling "could also give Comcast reason to start lower" in its bidding for Fox' assets. Since the federal judge "didn’t impose so much as a single constraint on the merger, the regulatory concerns that previously hung over a Fox deal will be looking far less worrisome." But whatever Comcast offers, Disney is "sure to counterbid." Investment firm Jefferies media analyst John Janedis said that if a bidding war "takes off, and it could given Fox’s strategic importance and the capacity of both companies to stretch their balance sheets, bids could reach" up to $80B. That is the "maximum value at which the companies could maintain their investment-grade credit ratings" (WSJ.com, 6/13). Evolution Media analyst Sean Atkins said he finds it "hard to believe that Disney is going to match” a higher Comcast offer for Fox’ assets, “at least the first round what comes out.” Atkins said if the Murdoch family is “still playing a little bit for legacy” in the sale of assets, then it “gives the hand to Disney with a little bit of wiggle room.” Atkins noted Comcast “needs the assets more than Disney ... but if you’re looking at who’s going to execute the most, who has the most synergistic opportunities to really expand that portfolio over time, you have to give it to Disney” (“Squawk Box,” CNBC, 6/13).
ALL CLEAR AHEAD? In N.Y., Michael de la Merced notes Fox had "turned down Comcast last year, worried that the cable giant’s bid -- even though it was much higher than Disney’s -- could be blocked by regulators." But that concern was "lessened" with the AT&T-Time Warner ruling. The Fox assets that would "matter to antitrust regulators" are the 20th Century Fox movie and TV studios, 22 RSNs and its stake in Hulu. Comcast’s NBCU already owns nine RSNs and "would argue that the two sets of properties mostly don’t overlap." But if pressed, sources said that the company "would be willing to sell enough networks to satisfy regulators" (N.Y. TIMES, 6/13). VARIETY's Cynthia Littleton noted Comcast could point to the fact that "two-thirds of Fox’s channels are outside Comcast’s cable footprint -- which means the company will have to negotiate carriage deals" with rival Multichannel video programming distributors "just like any other content owner" (VARIETY.com, 6/12).
BATTLE ROYALE: In N.Y., Edmond Lee writes the battle for Fox' assets will pit Comcast Chair & CEO Brian Roberts against Disney Chair & CEO Bob Iger in "what could be a fierce bidding war." Meanwhile, mergers like this "will allow companies to compete for costlier rights to professional sports, seen as perhaps the only way to keep viewers from cutting the cable cord, and to build out their streaming services" (N.Y. TIMES, 6/13). The AP's Mae Anderson notes if Comcast "succeeds in outbidding Disney for Fox, a major cable distributor would control even more channels on its lineup and those of its rivals." There are "fears that it could lead to higher cable bills or hinder online alternatives" (AP, 6/13).