Af­ter AT&T win, here comes Com­cast-Fox bid

The Republican Herald - - BUSINESS - BY MAE AN­DER­SON

NEW YORK — Af­ter AT&T-Time Warner comes the del­uge.

Com­cast bid $65 bil­lion for Fox’s en­ter­tain­ment busi­ness on Wed­nes­day, a day af­ter a fed­eral judge has cleared AT&T’s $85 bil­lion takeover of Time Warner.

If Com­cast suc­ceeds in out­bid­ding Dis­ney for Fox, it would give a ma­jor ca­ble dis­trib­u­tor con­trol even more chan­nels on its lineup than those of its ri­vals. There are fears that it could lead to higher ca­ble bills or hin­der on­line al­ter­na­tives.

But U.S. District Judge Richard Leon cleared the AT&T deal Tues­day de­spite sim­i­lar con­cerns. The rul­ing sig­naled that fed­eral reg­u­la­tors might have a hard time stop­ping com­pa­nies from get­ting big­ger by gob­bling up ri­vals and the con­tent they own.

Com­cast isn’t likely the only mega-me­dia bid in the works. There will prob­a­bly be a rush to con­sol­i­date. Cowen an­a­lyst Gregory Williams said the rul­ing could un­leash “pent up” de­mand for merg­ers and ac­qui­si­tions “across the Pay-TV land­scape.”

Even if a com­pany doesn’t need to get big­ger right away, it might need to do so to pre­vent be­ing over­shad­owed by a com­peti­tor.

Here’s a look at some of the pro­posed com­bi­na­tions that could trans­form the me­dia land­scape and change how peo­ple get their en­ter­tain­ment.

Fox with Dis­ney or Com­cast

Dis­ney has made a $52.4 bil­lion all-stock of­fer for the bulk of Twenty-First Cen­tury Fox, in­clud­ing the stu­dios be­hind the “Avatar” movies, “The Simp­sons” and “Mod­ern Fam­ily,” along with Na­tional Ge­o­graphic. Marvel would get back the char­ac­ters pre­vi­ously li­censed to Fox, re­unit­ing X-Men with the Avengers.

Now Com­cast has struck back with a larger $65 bil­lion of­fer, all in cash. If Com­cast suc­ceeds in snap­ping up Fox, it could di­min­ish the ap­peal of a planned Dis­ney stream­ing ser­vice, which would heav­ily fea­ture movies and shows from Marvel and the “Star Wars” fran­chise.

David Turet­sky, a pro­fes­sor at the State Univer­sity of New York at Albany, warns that the AT&T rul­ing is based on “spe­cific facts and ev­i­dence” that may or may not ap­ply in other cases. Still, there are many sim­i­lar­i­ties be­tween a Com­cast-Fox com­bi­na­tion and the AT&T-Time Warner deal that just passed ju­di­cial muster.

Com­cast made its bid af­ter the close of trad­ing, but Wall Street was braced for a bid­ding war. Shares in Fox in­creased 7.5 per­cent to an all-time high of $43.41. Dis­ney gained al­most 2 per­cent, while Com­cast edged down six cents to $32.32.

sprint and T-Mo­bile

In April, the two tele­com com­pa­nies an­nounced a $26.5 bil­lion com­bi­na­tion. The deal would com­bine the na­tion’s third- and fourth-largest wire­less com­pa­nies and bulk them up to a sim­i­lar size to Ver­i­zon and AT&T, the in­dus­try gi­ants.

The worry is that with just three ma­jor car­ri­ers, there would be less in­cen­tive to keep in­no­vat­ing on prices and ser­vice. T-Mo­bile and Sprint might even raise prices now that they don’t have to try to poach cus­tomers off each other.

A 2014 at­tempt to com­bine fell apart amid re­sis­tance from the Obama ad­min­is­tra­tion. But the in­dus­try is dif­fer­ent just four years later. Wire­less car­ri­ers aren’t just com­pet­ing with each other, but also with Com­cast and oth­ers as the wire­less, broad­band and video in­dus­tries con­verge. AT&T is about to get larger with CNN, HBO and other chan­nels from Time Warner. Be­yond com­bin­ing with each other, T-Mo­bile and Sprint might need its own con­tent ac­qui­si­tion to com­pete.

Cbs and Vi­a­com

CBS has re­sisted pres­sure from its con­trol­ling share­holder, Na­tional Amuse­ments, to merge with Vi­a­com, which also is con­trolled by Na­tional Amuse­ments. The two com­pa­nies used to be one but sep­a­rated in 2005.

A com­bi­na­tion would re­unite CBS’s tele­vi­sion busi­ness with Vi­a­com’s pro­duc­tion stu­dios, sim­i­lar to the ar­range­ments now in place at NBC owner Com­cast and ABC owner Dis­ney. (On the flip side, the Fox tele­vi­sion net­work and stu­dios would sep­a­rate un­der a deal with ei­ther Com­cast or Dis­ney.)

With Vi­a­com, the $6-a-month CBS All Ac­cess stream­ing ser­vice might have a larger li­brary, as Vi­a­com owns MTV, Nick­elodeon, Com­edy Cen­tral and other ca­ble net­works.


Ver­i­zon, which bought AOL and Ya­hoo in re­cent years, could be on the prowl for other en­ter­tain­ment prop­er­ties. Ver­i­zon wants to chal­lenge Google and Face­book in the huge and lu­cra­tive field of dig­i­tal ad­ver­tis­ing — and hav­ing more con­tent could help. There’s spec­u­la­tion that CBS could be a po­ten­tial tar­get. With its main wire­less ri­val AT&T be­com­ing even more of a con­tent pow­er­house, Ver­i­zon might feel the need to grow.

Cowen’s Williams sug­gests, how­ever, that rather than buy an en­ter­tain­ment or me­dia com­pany, Ver­i­zon might buy a com­pany that bol­sters its net­work or in­fra­struc­ture. Ca­ble com­pany Char­ter or satel­lite TV com­pany Dish are “ideal can­di­dates,” he wrote in a re­search note.

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