How Fox goes with Dis­ney, Com­cast

Bids raise dif­fer­ent reg­u­la­tory con­cerns, come as me­dia land­scape changes

The Daily Star (Lebanon) - - BUSINESS - By Mae An­der­son

NEW YORK: Com­pet­ing bids from Com­cast and Dis­ney for the bulk of Twenty-First Cen­tury Fox come as the me­dia land­scape changes and com­pa­nies get more in­volved in both cre­at­ing and dis­tribut­ing con­tent.

“X-Men” and other movies from Fox’s stu­dios would help beef up Dis­ney’s up­com­ing streaming ser­vice. Com­cast, al­ready a ma­jor ca­ble op­er­a­tor, would get a larger port­fo­lio of ca­ble chan­nels in­clud­ing FX and Na­tional Ge­o­graphic.

Com­cast’s $65 bil­lion cash bid Wed­nes­day was higher than what many an­a­lysts were ex­pect­ing and topped Dis­ney’s all-stock of­fer, val­ued at $52.5 bil­lion when it was made in De­cem­ber.

GBH In­sights an­a­lyst Dan Ives said Com­cast’s price “speaks to Com­cast re­ally want­ing these key as­sets.” Dis­ney is ex­pected to make a coun­terof­fer.

Each bid raises dif­fer­ent reg­u­la­tory con­cerns, though this week’s ap­proval of AT&T’s takeover of Time Warner sig­nals that reg­u­la­tors might have a hard time stop­ping megamerg­ers. Here’s how the com­pa­nies would match up.

MOVIES

Fox’s film stu­dios, with “Avatar,” X-Men, the Fan­tas­tic Four and Dead­pool, would pair well with Dis­ney’s stu­dios. This in­cludes re­unit­ing the Mar­vel fran­chise’s X-Men and the Avengers, as some of those char­ac­ters were al­ready in Fox’s hands when Dis­ney bought Mar­vel in 2009. Dis­ney also has the Mup­pets, Pixar and “Star Wars.”

In fact, Fox and Dis­ney might pair too well, as far as reg­u­la­tory con­cerns go. BTIG an­a­lyst Richard Green­field es­ti­mates the com­bined stu­dios make up 45 per­cent of world­wide box of­fice rev­enue. A larger stu­dio could use its power to keep its movies in more the­aters longer and squeeze out ri­val movies.

Com­cast’s Uni­ver­sal movie busi­ness has such fran­chises as “Juras­sic Park.” The Fox prop­er­ties would ex­pand Com­cast’s reach, though the com­pany would have just 25 per­cent of the box of­fice with Fox added, ac­cord­ing to fig­ures from Box Of­fice Mojo.

TELE­VI­SION

Fox’s TV pro­duc­tions in­clude “The Amer­i­cans,” “This Is Us,” “Mod­ern Fam­ily,” and “The Simp­sons.” Its net­works in­clude FX Net­works and Na­tional Ge­o­graphic. The Fox busi­nesses would pair well with Dis­ney chan­nels like ABC, the Dis­ney Chan­nel and Freeform. “Mod­ern Fam­ily” al­ready airs on ABC.

Com­cast owns NBCUniver­sal, in­clud­ing the NBC broad­cast net­work, CNBC and USA. Com­cast’s stu­dios pro­duce “Chicago Fire” and “Will & Grace,” both air­ing on NBC.

Com­cast might run into reg­u­la­tory prob­lems be­cause the ca­ble op­er­a­tor would con­trol a larger port­fo­lio of con­tent along with its dis­tri­bu­tion. How­ever, a fed­eral judge Tues­day approved a sim­i­lar at­tempt by DirecTV owner AT&T to buy Time Warner. The judge re­jected the govern­ment’s fears that the AT&T deal could lead to higher prices for con­sumers or hin­der on­line al­ter­na­tives from get­ting con­tent.

Re­gard­less of which com­pany pre­vails in buy­ing Fox, the Fox tele­vi­sion net­work and some ca­ble chan­nels in­clud­ing Fox News will stay with me­dia mogul Ru­pert Mur­doch.

SPORTS

Dis­ney’s deal in­cludes get­ting Fox’s re­gional sports net­work, which shows home­town sports in sev­eral cities in­clud­ing New York and Los An­ge­les. Those net­works would com­ple­ment Dis­ney’s na­tion­ally fo­cused ESPN.

Dis­ney re­cently launched ESPN Plus, a sep­a­rate streaming ser­vice with more lo­cal of­fer­ings. That ser­vice could ben­e­fit from Fox’s re­gional of­fer­ings. Com­cast al­ready has sim­i­lar re­gional net­works through NBC Sports, in­clud­ing ones in Bos­ton, Chicago and the San Francisco Bay area.

Get­ting the Fox net­works would ex­pand Com­cast’s ter­ri­to­rial reach.

STREAMING

Whichever com­pany pre­vails will con­trol streaming ser­vice Hulu.

Cur­rently, Com­cast, Dis­ney and Fox each have a 30-per­cent stake, with Time Warner own­ing the other 10 per­cent. With Fox’s share, ei­ther Com­cast or Dis­ney would end up with a con­trol­ling 60-per­cent stake.

Dis­ney al­ready plans an en­ter­tain­ment-fo­cused streaming ser­vice in 2019. If Dis­ney pre­vails, it could com­bine that with Hulu or keep them as sep­a­rate ser­vices. If Com­cast pre­vails, Dis­ney’s ser­vice could be less ap­peal­ing, as it wouldn’t have Fox video. Com­cast doesn’t cur­rently have sim­i­lar streaming am­bi­tions and wouldn’t ben­e­fit as much from the Fox video.

IN­TER­NA­TIONAL

In­ter­na­tion­ally, Fox’s ca­ble and in­ter­na­tional TV busi­nesses are part of the of­fer­ings. That’s key for Com­cast, which has a lim­ited over­seas pres­ence. Dis­ney and Com­cast had al­ready been at bat­tle in the U.K. over Sky, an op­er­a­tor of tele­vi­sion chan­nels. Fox has a 39 per­cent stake in Sky and has been try­ing to buy out­right, with the in­ten­tion of sell­ing the full com­pany to Dis­ney as part of that deal. U.K. reg­u­la­tors have given the OK to that of­fer if Fox sells Sky News. Reg­u­la­tors there also have cleared Com­cast’s $30.7 bil­lion of­fer for the 61 per­cent of Sky that Mur­doch doesn’t own.

Other in­ter­na­tional net­works in­clude Fox Net­works Group In­ter­na­tional, Star In­dia, Tata Sky and En­de­mol Shine Group.

THEME PARKS

Com­cast and Dis­ney have made ex­ten­sive use of their port­fo­lios at their theme parks in Cal­i­for­nia, Florida and over­seas. Dis­ney, for in­stance, is ex­pand­ing its attractions re­lated to “Star Wars.” On the flip side, Dis­ney turned its Pi­rates of the Caribbean ride into a ma­jor movie fran­chise. Com­cast’s Uni­ver­sal Stu­dios has attractions based on Uni­ver­sal’s “Fast and the Fu­ri­ous” fran­chise.

Ei­ther com­pany would be able to ex­pand its op­por­tu­ni­ties with Fox, though the theme parks have his­tor­i­cally been able to reach li­cens­ing deals with ri­val stu­dios.

Uni­ver­sal, for in­stance, has rides based on Fox’s “The Simp­sons” and Warner Bros.’ “Harry Pot­ter.” Dis­ney has li­censed Fox’s “Avatar” for its “Pan­dora” park within Walt Dis­ney World.

Com­cast’s $65 bil­lion cash bid Wed­nes­day was higher than what many an­a­lysts were ex­pect­ing.

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