Comcast outbids Disney for Fox assets
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”.