Walt Disney under gun to respond to Comcast’s $65 billion Fox bid
Your move, Disney. After Comcast Corp. made a $65 billion bid on Wednesday for 21st Century Fox Inc.’s entertainment assets—the same holdings that Walt Disney Co. had agreed to buy for about $52.4 billion—the Mouse House is under pressure to respond.
At stake is a trove of media properties, ranging from The Simpsons to X-Men, that are key to Disney fending off the threat from Netflix Inc. and other streaming upstarts. The question is whether Disney can convince Fox investors that it’s still the most compelling partner.
“So far Comcast has put a lot more muscle and aggression into its moves,” said Claire Enders, founder of media research firm Enders Analysis. “Clearly the resolve on the Comcast side is absolute.”
Comcast, the largest US cable-TV provider, is offering $35 a share for the Fox assets, saying the bid represents a 19% premium over the Disney offer. And it’s cash, rather than the stock that Disney is proposing.
The move follows AT&T Inc.’s victory over the US justice department in its antitrust battle to take over Time Warner Inc. That outcome is expected to spur a wave of media consolidation, emboldening companies to make offers they might otherwise have skipped.
The Disney-Comcast contest will determine who controls much of Rupert Murdoch’s empire, including Fox’s movie and TV studios, television networks such as FX, and multichannel providers like Star India and Sky Plc. With Wednesday’s bid, Comcast chief executive officer Brian Roberts is seeking to disrupt Disney CEO Bob Iger’s plan to use Fox properties to bolster that company’s already-vast entertainment offerings.
Under the terms of its merger agreement with Fox, Disney has the right of refusal on any counter-offer. While it will have five days to make a fresh bid, the clock doesn’t start ticking until after the Fox board has assessed the Comcast offer and deemed it superior to Disney’s.
Disney, based in Burbank, California, didn’t have an immediate comment.
Comcast first approached Fox last year with an informal proposal. Comcast bid 16% more than Disney for Fox’s media properties, but that offer was deemed too risky. The AT&T decision has lifted some of those clouds.
Murdoch, 87, also wasn’t swayed by Comcast’s overtures because the cable company didn’t offer a breakup fee. Comcast said last month that its new offer would be at least as favorable to Fox shareholders as Disney’s terms. Indeed, the proposal unveiled on Wednesday includes a $2.5 billion termination fee— similar to what Disney has offered. “We are pleased to present a new, all-cash proposal that fully addresses the board’s stated concerns with our prior proposal,” Roberts, 58, said in a letter to Rupert Murdoch and his sons, Lachlan and James, who also serve as Fox executives.
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