Comcast’s Fox bid: How will Disney respond?
new york — 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 cableTV provider, is offering $35 a share for the Fox assets, saying the bid represents a 19 per cent 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 alreadyvast entertainment offerings.
Under the terms of its merger agreement with Fox, Disney has the right of refusal on any counteroffer. 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
So far Comcast has put a lot more muscle and aggression into its moves Claire Enders,
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 per cent 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.
“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. “We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction.”
In response, Fox said it would “carefully review” Comcast’s unsolicited proposal.
Disney’s Fox bid, which was hammered out in December, was partly a bulwark against the technology giants that are storming Hollywood. Traditional media companies have been racing to bulk up, betting that having more content will give them an edge.
In recent weeks, Philadelphiabased Comcast confirmed its desire to outbid Disney in advance of shareholder votes set for July 10. On Wednesday, it filed a proxy statement urging investors to oppose the Disney deal. Fox said it hasn’t yet made a decision whether to postpone the vote.
Comcast already owns film and TV studios, broadcast and cable TV operations including the NBC and USA networks, and the Universal Studios theme parks. But both Disney and Comcast could use Fox’s TV and movie properties to stream more content directly to consumers and compete with Netflix. The companies also are interested in expanding internationally at a time when the US television business is slowing.
When a federal judge rejected the Justice Department’s suit against the Time Warner deal, it was seen as an endorsement of socalled vertical mergers — combinations that include both media distribution and the programming itself. — Bloomberg
Founder, Enders Analysis