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Volume 25 No. 45
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Comcast Kicks Off Bidding War For Fox Assets With $65B Offer

Comcast yesterday "made an unsolicited offer to buy" most of 21st Century Fox for roughly $65B, "kicking off a bidding war" with Disney, according to a front-page piece by Ramachandran & Schwartzel of the WALL STREET JOURNAL. The assets "range from a storied Hollywood studio and international pay-TV distribution to cable networks and a stake in streaming company Hulu." That is a "premium of nearly 20% to Disney’s all-stock offer for the same set of assets." Neither bid "includes Fox News, Fox Sports 1 or the Fox broadcast network." Sources said that Disney is "lining up financing in the event it chooses to counter Comcast’s offer with new terms that include cash." The Comcast offer "follows a federal court ruling Tuesday that approved" AT&T’s acquisition of Time Warner. The AT&T ruling "emboldened Comcast to relaunch its bid for Fox with an offer that isn't much higher than what it had earlier proposed." Sources said that Comcast "may continue to have regulatory issues, given it is the largest high-speed broadband provider in the U.S." Fox has "set a July 10 meeting for shareholders to vote on the sale to Disney" (WALL STREET JOURNAL, 6/14). In N.Y., Lee & Barnes in a front-page piece write the move by Comcast to outbid Disney "reflects an industry under threat from Silicon Valley, where deep-pocketed technology companies like Netflix and Amazon are stealing audiences, ad dollars and big name creative talents." There are "questions about how hard Disney will fight." Cowen & Company media analyst Doug Creutz said Disney Chair & CEO Bob Iger "has never (as far as we are aware) been put in a position where a proposed acquisition faced a significant competitive challenge such as this, so it’s hard to gauge his sensitivity to price" (N.Y. TIMES, 6/14).

Roberts is confident that Comcast's existing businesses could quickly cut Fox's debt
Photo: GETTY IMAGES

ART OF THE DEAL: In Philadelphia, Bob Fernandez cites analysts as saying that Comcast "needs to make the deal to keep up with new threats from technology firms that are increasingly expanding into entertainment." Financial services firm Moody's said that the Fox and related Sky TV deal "could lead to almost" $100B in debt and "potentially transform the conservatively run Comcast into the second-most-indebted company in the world." Comcast CEO Brian Roberts said that he and the board "were confident that the company’s existing businesses ... could quickly cut the debt" (PHILADELPHIA INQUIRER, 6/14). CABLEFAX DAILY's Amy Maclean notes that is a "point Comcast has been stressing since its stock has taken a shellacking following the Sky bid." Roberts said that he "believes that leverage will be brought back down, partly due to the predictability of being in the subscription business" (CABLEFAXDAILY.com, 6/14).

PRESSURE ON IGER, DISNEY: USA TODAY's Wong & Baig write a successful Comcast deal "would be a blow to Disney and Iger, who has pinned Disney's future to hit movies and TV shows it could gain with Fox that could bolster Disney's own streaming services" (USA TODAY, 6/14). DEADLINE.com's Dominic Patten noted regardless of if it is personal, business or a combination and how much  Iger "might not be smiling right now, the Murdoch clan are corporately obliged to give the offer from the Philadelphia based owners of NBCUniversal due consideration" (DEADLINE.com, 6/13). GBH Insights analyst Dan Ives said, "This is a golden offer that will put considerable pressure on Iger and Disney to step up their game on another bid." The AP's Mae Anderson noted if the Comcast bid succeeds, a major cable distributor "would control even more channels on its lineup and those of its rivals." That "could lead to higher cable bills or make it more difficult for online alternatives to emerge, though there is not yet evidence of either happening following other mergers." For Disney, a successful Comcast bid could make its planned streaming service "less attractive, without the Fox video" (AP, 6/13). CNBC’s Joe Kernen said there is "no way Disney can say, ‘We’re standing with this and we want Fox to live up to (their original offer).’” CNBC’s Andrew Ross Sorkin said Comcast has now put Iger "in a box," and he "has to come back and do something” ("Squawk Box," CNBC, 6/14).

REFLECTION OF THE TIMES: The AP's Anderson writes the battle for Fox "reflects a new imperative among entertainment and telecommunications firms." Entertainment programming is "becoming more important as ways to deliver it to consumers proliferate." Cable companies like Comcast are "no longer competing only with satellite alternatives such as DirecTV, but also stand-alone services such as Netflix and cable-like online bundle" (AP, 6/14). Anderson writes Disney's deal "includes getting" Fox' RSNs, but Comcast "already has similar regional networks through NBC Sports." Getting the Fox networks would "expand Comcast's territorial reach" (AP, 6/14). In Newark, Mike Rosenstein writes if the Fox-Disney merger is approved, YES Network "will be owned by the same company which owns the ESPN empire." What all this "means for Yankees fans is this: One way or another, the YES Network will find itself part of a larger, media conglomerate." With that "comes more cross-promotion with other company-owned properties." Both Comcast and Disney "own several sports media outlets, so there will also be a chance for increased exposure of Yankees coverage to out-of-market fans, as well as exposure to Yankees fans of non-Yankees related content." Being owned by Comcast or Disney "would, in theory, help YES Network negotiate carriage agreements with other service providers, and perhaps avoid the type of spat between Comcast and YES which led to a two-year blackout of the channel, before a deal was struck" in '17 (NEWSDAY, 6/14).

EXECUTIVE MOVEMENT: VARIETY's Littleton & Lang cite sources as saying that after months of rumors, 21st Century Fox President Peter Rice, who "oversees all of Fox’s TV operations, has been on track to make the move to Disney in a senior management role and could potentially succeed Iger when his contract expires." Fox TV Group co-Chair & CEO Dana Walden is "also said to be planning to join Disney," as is FX Networks CEO John Landgraf. Iger has been on a "charm offensive with Rice, Walden and other top Fox division heads, as he assembled a dream-team for the enlarged Disney" (VARIETY.com, 6/13). 

AT&T DEAL AFTERMATH: The WALL STREET JOURNAL's Matt Wirz notes AT&T's deal to purchase Time Warner will be "dwarfed by an even bigger figure: the combined combined company's approximately" $181B debt load. Increased revenue from Time Warner's media properties and postdeal cost-cutting is "expected to generate cash to pay down the additional debt over time" (WALL STREET JOURNAL, 6/14). The WALL STREET JOURNAL's Flint, FitzGerald & Bruell in a front-page piece note AT&T is "trying to gain ground in a marketplace battle to win over cord-cutters who are dropping cable and satellite services including its own DirecTV." It is "planning to release a roughly $15-a-month bundle of channels, including Turner’s CNN, TNT and TBS, that doesn’t include sports networks." AT&T’s takeover of DirecTV is the "closest blueprint Time Warner has for what may lie ahead." After AT&T assumed control, it "combed through the executive ranks and gave many people new, less-impressive titles and lower salaries" (WALL STREET JOURNAL, 6/14). The N.Y. TIMES details the "Winners and Losers" of the AT&T verdict (N.Y. TIMES, 6/14).