Com­cast chal­lenges Dis­ney with a $65 bil­lion bid for 21st Cen­tury Fox.

Houston Chronicle - - BUSINESS - By Steven Zeitchik

NEW YORK — Com­cast made a $65 bil­lion bid Wed­nes­day for 21st Cen­tury Fox in what is ex­pected to be the first of many at­tempts to buy up pieces of the en­ter­tain­ment world after AT&T’s de­ci­sive le­gal vic­tory over the govern­ment to buy Time Warner.

The of­fer sets up a bat­tle of wills be­tween two of the most dom­i­nant and deep-pock­eted en­ter­tain­ment com­pa­nies in the world — Walt Dis­ney, which pro­posed a $52.4 bil­lion of­fer for Fox last year, and Com­cast, the na­tion’s lead­ing cable com­pany, which al­ready owns Univer­sal Stu­dios and NBC.

Such merger pro­pos­als are un­likely to be the last to be an­nounced in the com­ing months, an­a­lysts said. The stocks of en­ter­tain­ment com­pa­nies soared Wed­nes­day, as in­vestors grew giddy at the prospect of big con­glom­er­ates buy­ing ail­ing film and tele­vi­sion stu­dios.

The im­pe­tus to own con­tent has be­come even more ur­gent as tech­nol­ogy has dis­rupted the tra­di­tional ways con­sumers get shows and movies. Amer­i­cans in­creas­ingly are con­sum­ing en­ter­tain­ment on their smart­phones or over high-speed in­ter­net con­nec­tions, rather than on liv­ing-room tele­vi­sions plugged into cable out­lets. And the com­ing ad­vent of a new ul­tra­fast wire­less tech­nol­ogy called 5G is ex­pected to ac­cel­er­ate the trend.

That has left cable, tele­coms and tech giants ur­gently search­ing for premier con­tent they can con­trol. Be­yond AT&T and Com­cast, Ap­ple, Google and Ama­zon have all moved into pro­duc­ing or buy­ing orig­i­nal pro­gram­ming. Mean­while, Dis­ney is plan­ning to launch a stream­ing app that will en­able it to reach con­sumers di­rectly and com­pete with com­pa­nies such as Net­flix.

“We’re deal­ing with huge com­pa­nies that have the fi­nan­cial value greater than some coun­tries,” said Mary Ann Hal­ford, a global me­dia strate­gist at OC&C Strat­egy Con­sult­ing, said of tech giants mov­ing into en­ter­tain­ment. “If (legacy en­ter­tain­ment) com­pa­nies news­pa­per in­dus­try.”

Whether the moves by all of these com­pa­nies into each other’s busi­nesses im­pacts the shows them­selves re­mains to be seen. Many in­de­pen­dent pro­duc­ers fear that 21st Cen­tury Fox would see changes once in the hands of Com­cast or Dis­ney, both of which have stressed big tent­pole fran­chises more than films out­side pop­u­lar cul­ture.

Some com­pa­nies have wor­ried whether the govern­ment would block some of these deals. But such con­cerns are wan­ing in the wake of AT&T’s win in court over

Its fight with Dis­ney will play out in real time over the next week as Fox read­ies for a sched­uled board meet­ing on June 20 at which the is­sue will be raised. A meet­ing with 21st Cen­tury Fox share­hold­ers on July 10 to dis­cuss the of­fers will fur­ther ce­ment the com­pany’s fate.

The orig­i­nal agree­ment be­tween Dis­ney and Fox in De­cem­ber called for Ru­pert Mur­doch’s com­pany sell­ing many of its as­sets, in­clud­ing his film and tele­vi­sion stu­dios, Na­tional Geo­graphic, a 30 per­cent stake in Hulu and its 39 per­cent stake in Euro­pean cable gi­ant Sky to Dis­ney. Many an­a­lysts now ex­pect Dis­ney to raise its of­fer.

But more than money dis­tin­guishes the com­pet­ing bids from Com­cast and Dis­ney. By adding shows like “This Is Us” and movie fran­chises like “Avatar” to its rich sta­ble of Star Wars, Pixar, and Mar­vel movies, Dis­ney would gain a com­mand­ing po­si­tion in the en­ter­tain­ment world, en­abling it to bet­ter dic­tate terms to theater and cable com­pa­nies and en­tice mil­lions to subscribe to its up­com­ing stream­ing ser­vice.

Mark Ral­ston / AFP / Getty Im­ages

A worker stands near a gate for Fox Stu­dios, the sub­ject of a bid­ding war, in West Los An­ge­les.

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