Com­cast out­bids Dis­ney for Fox as­sets

The Phnom Penh Post - - BUSINESS -

COM­CAST on Wednesday of­fered $65 bil­lion for key film and tele­vi­sion as­sets of Ru­pert Mur­doch’s 21st Cen­tury Fox, top­ping an of­fer from Walt Dis­ney Co for a deal that could cre­ate a dom­i­nant me­dia-en­ter­tain­ment power.

The move by Com­cast, which is the largest US ca­ble provider and also owns the NBCUniver­sal me­dia group, opens up a new round of com­pe­ti­tion for the prized as­sets be­ing shed by the Mur­doch fam­ily em­pire.

The deal, if ap­proved, would merge Com­cast-owned Uni­ver­sal Stu­dios and the NBC tele­vi­sion net­work with Hol­ly­wood ri­val 20th Cen­tury Fox, Fox’s en­ter­tain­ment net­works and in­ter­na­tional TV busi­nesses.

“These are highly strate­gic and com­ple­men­tary busi­nesses and we are in our minds the right buyer,” said Com­cast chair­man and chief ex­ec­u­tive Brian Roberts.

Roberts said Mur­doch had built “one of the world’s great me­dia and en­ter­tain­ment com­pa­nies”, and that its his­tory is sim­i­lar to that of Com­cast’s.

With the deal, Roberts said Com­cast would stay on track “to build the en­ter­tain­ment com­pany of the fu­ture”.

Roberts said the all-cash bid is nearly 20 per­cent richer than the $52 bil­lion stock of­fer from Dis­ney, and said Com­cast would match the Dis­ney of­fer of a $2.5 bil­lion fee if the deal fails to win reg­u­la­tory ap­proval.

“We are highly con­fi­dent in our abil­ity to fi­nance the trans­ac­tion, and our of­fer in­cludes no fi­nanc­ing-related con­di­tions,” Com­cast said in a let­ter to Ru­pert Mur­doch and his sons Lach­lan and James.

The state­ment pointed out that Com­cast and Fox had been in talks be­fore the Mur­dochs reached the deal with Dis­ney, which is be­ing sub­mit­ted for a share­holder vote on July 10.

The new of­fer is likely to prompt a re­sponse from Dis- ney, and force the Mur­dochs to re­view their po­si­tion on the tie-up with Dis­ney, which owns the ABC tele­vi­sion net­works, ESPN and is a ma­jor Hol­ly­wood player.

The new land­scape

The news comes a day af­ter a fed­eral judge ap­proved a mas­sive $85 bil­lion takeover by tele­com-broad­band gi­ant AT&T or me­dia-en­ter­tain­ment con­glom­er­ate Time Warner that could re­shape the me­dia and com­mu­ni­ca­tions land­scape.

The court ap­proval ended a heated an­titrust bat­tle, and sug­gested Com­cast would be able to clear any reg­u­la­tory hur­dles to a deal with Fox.

Com­cast said any an­titrust con­cerns should be eased by Tuesday’s court rul­ing on AT&T and that its of­fer “should be as or more likely to re­ceive in­ter­na­tional ap­provals, given our rel­a­tively small pres­ence out­side the US”.

“We be­lieve yes­ter­day’s de­ci­sion in the AT&T case sup­ports our con­fi­dence,” Com­cast Chief Fi­nan­cial Of­fi­cer Mike Ca­vanagh said.

The deal be­came pos­si­ble when Ru­pert Mur­doch, 87, and his sons de­cided to slim down the me­dia em­pire, leav­ing them with a “New Fox” that in­cludes the Fox News Chan­nel, the Fox broad­cast net­work and sports ca­ble oper­a­tions.

Com­cast, if suc­cess­ful, would be able to ex­pand be­yond US bor­ders to new mar­kets in Eu­rope and In­dia.

In­cluded in the sale is Fox’s 39 per­cent stake in the Bri­tish pay TV op­er­a­tor Sky. Mur­doch has sought full con­trol of Sky but has faced op­po­si­tion from reg­u­la­tors in Bri­tain.

Com­cast ear­lier this year made an of­fer of $30.7 bil­lion in cash for Sky, in a move wel­comed by the Bri­tish firm.

The deal­mak­ing comes with tra­di­tional me­dia pres­sured by new busi­ness mod­els from Net­flix, Ama­zon and oth­ers. Dur­ing the AT&T an­titrust trial, ex­ec­u­tives main­tained they need more scale and bet­ter data to com­pete with on­line ser­vices.

Who­ever wins the bat­tle for Fox as­sets would also get its 30 per­cent stake in Hulu, the on­line plat­form cre­ated by me­dia groups to chal­lenge Net­flix and Ama­zon.

Com­cast and Dis­ney each own a 30 per­cent stake in Hulu and Time Warner holds 10 per­cent.

John Bergmayer of the con­sumer group Pub­lic Knowl­edge said any Com­cast deal should face scru­tiny, es­pe­cially in light of the ex­pi­ra­tion of pro­vi­sions from its 2011 takeover of NBCU.

“With­out the pro­tec­tions of the con­sent de­cree, Com­cast will al­ready have the abil­ity to harm its ri­vals, rais­ing prices for con­sumers,” Bergmayer said.

Bergmayer said that the deal raises “sig­nif­i­cant an­titrust and reg­u­la­tory con­cerns” and added that “fur­ther con­sol­i­da­tion is the last thing con­sumers need”.

GETTY IM­AGES/AFP SPENCER PLATT/

A man walks by the head­quar­ters of 21st Cen­tury Fox on Wednesday in New York City. Com­cast, the gi­ant ca­ble op­er­a­tor, on Wednesday of­fi­cially made a $65 bil­lion all-cash bid for the ma­jor­ity of Fox.

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