Comcast pulls out of fight for Fox

$71B Disney bid would get assets

LOS ANGELES — The Walt Disney Co. has prevailed in the bidding war for much of Rupert Murdoch’s empire after Comcast Corp. said Thursday that it was dropping out of the fight for 21st Century Fox’s entertainment assets to instead focus on its bid for European pay-TV giant Sky.

Comcast’s early morning announcement is a victory to Disney Chief Executive Officer Bob Iger, who has agreed to spend $71 billion for the Fox assets, which include the company’s prolific television and movie studios, cable channels FX and National Geographic and international properties in India and Latin America.

Comcast would have had to offer more than $80 billion to stay competitive with Disney’s sweetened $71 billion bid.

What’s more, each additional offer for Fox also raised the price of the Sky television service because Fox owns 39 percent of Sky, which Murdoch co-founded in the late 1980s. Comcast decided to fold in the Fox fight so that it could claim the international prize it really wants — London-based

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Sky, according to a person familiar with the company’s thinking.

“I’d like to congratulate Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company,” Comcast Chairman and CEO Brian Roberts said in a statement.

The Disney-Fox transaction is expected to transform Hollywood into a land of fewer giants. Disney is taking the big swing because it feels it needs greater scale — and more entertainment firepower — to compete with tech titans such as Netflix, Google, Facebook, Amazon.com and Apple Inc., which have deep pockets, global businesses and direct relationships with consumers.

Disney shares rose $1.44, or 1.3 percent, to close at $12.13 while Comcast’s rose 87 cents, or 2.6 percent, to $34.91 as the bidding war ended.

For Murdoch, the sale of key assets signals a retreat after half a century of empire building. However, the mogul from Australia plans to hold on to the assets that have been core to his company: Fox News Channel, the Fox Broadcast network, two national cable sports channels and a string of television stations.

The Justice Department gave a quick OK to Disney’s bid as long as it sells Fox’s 22 regional sports networks, including Prime Ticket and Fox Sports West in Los Angeles. Disney has agreed to sell those networks. Fox shareholders are set to vote on Disney’s sweetened offer on July 27.

Most analysts have long speculated that Disney had the edge mainly because its deal posed fewer regulatory hurdles than a Comcast-Fox merger. The Disney-Fox merger review lasted just five months.

After the Justice Department rendered its speedy decision, it was “game, set and match,” said Los Angeles investment banker Lloyd Greif, who was not involved in the deal.

Although Disney and Fox have a similar asset mix, Comcast has the complication of owning pay-TV and high-speed Internet services. Comcast is the nation’s largest provider of broadband Internet service — a fact that has troubled the Justice Department before. When the department said last week it would appeal the merger of AT&T and Time Warner, the door slammed on Comcast’s chances of persuading Murdoch and his executives that a regulatory review of a Comcast-Fox tie-up would go fast and smooth.

Comcast Corp., which owns NBCUniversal, ultimately concluded that it had little chance of wresting Murdoch’s entertainment assets away from Disney. In late June, Disney upped its ante with an offer of $71.3 billion — or $38 a share — for the Fox businesses. Comcast had made a $65 billion all-cash bid.

In the end, Comcast could not overcome the huge head start enjoyed by Iger, who began courting Murdoch last summer. Talks heated up in the fall and, in December, Fox agreed to sell to Disney.

Murdoch twice rebuffed Roberts’ advances. He preferred Iger’s stock-and-cash proposal that would allow the Murdoch family to become major shareholders in Disney.

This is the third time that Roberts has been forced to retreat from a major acquisition. Comcast in 2004 abandoned its hostile takeover of Burbankbased Disney amid a Comcast shareholder revolt.

Then, in 2015, the company pulled the plug on a deal to buy Time Warner Cable after the Justice Department indicated that it would sue to block the merger. Charter Communications bought Time Warner Cable (now Spectrum) the following year.