Brook Lyn

Comcast eyes to break Disney-Fox deal

As media industry is getting more and more competitive these days with the advent of new and fast-growing competitors like Apple, Amazon and Netflix, old media giants like Comcast are relying on finding new partners.

Disney and Fox made a $52.4 billion deal last year, according to which Disney would acquire Fox’s studios and cable networks, its stake in European broadcaster Sky and some regional sports networks. This agreement would provide a boost to the already dominant Disney, thus augmenting its Marvel properties and bolstering the ESPN empire. But Comcast also had it eyes set on the Fox assets. The Philadelphia media giant made an all-cash bid for the Fox properties “at a premium to the value of the current all-share offer from Disney.” Comcast also aims to acquire Fox as it might help it grow and stay relevant in a rapidly shifting industry.

Fox has earlier rejected a Comcast proposal before deciding to strike a deal with Disney. Still Comcast’s move to bid for Fox is nothing but strategic as its executives knew that 21st Century Fox was scheduling a shareholder vote and they needed to get investors’ attention.

Comcast has not yet put a formal price tag on its offer but said in a statement that its bid for 21st Century Fox assets would be “at least as favorable to Fox shareholders as the Disney offer.” If Fox pulls out of the deal with Disney for any reason, the Murdoch family-controlled company would be liable to pay a breakup fee of $1.52 billion.

Disney is being expected by Wall Street to raise its bid. But Wall Street observers also suggest that the cable and media giant is not going to let this slide easily as some insiders’ reports say that Comcast would be looking to pay at least 15% above the current offer made by Disney. That would make the price for the Fox assets to remain around $60 billion.

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In the past few years, Rupert Murdoch’s preference has been to merge some of the companies of his media empire, including 20th Century Fox, with Disney. But money talks. Comcast hopes to eliminate the chance of a veto by Fox board by presenting its case directly to 21st Century Fox shareholders.

Media giants like Comcast, Walt Disney, Time Warner, 21st Century Fox, CBS, Viacom and Discovery control the quality of the content they produce and the service they offer, but they do not control the manner in which consumers watch it. People are, slowly but surely, moving away from movie theaters and living rooms and toward smart digital devices that allow them to control the way they experience their entertainment programming.

Many media giants, in recent months, have focused on consolidation in order to keep their customers under their collective tent. Comcast aims to bolster its own media channels by getting its hands on Fox assets. Networks such as FX and Nat Geo would provide a boost to the NBCUniversal’s cable lineup. NBC Sports and NBCSN would get augmentation from Fox’s regional sports networks. 20th Century Fox studio would broaden NBCU’s Universal and Focus studio holdings. Fox’s stake in Sky would enhance the capacity of NBC News, thus leveraging it into more of an international player.

Both companies have their reasons to seal the Fox deal. For the past few months, Comcast’s video customer base is in flux. Disney wants to feed Fox’s content to its own production companies as it plans to launch a direct-to-consumer service. But as Disney has revealed its offer for Fox assets. The question remains: What is keeping Comcast to make an offer? Insiders say that Comcast is likely waiting for a decision in the AT&T-Time Warner antitrust trial before putting forth a formal offer, which is expected to be handed down on June 12. If the decision of AT&T-Time Warner merger trial comes out to be favorable, Comcast would face less risks of regulatory roadblocks in its bid for Fox assets.

Fox has been avoiding to make any comments on the matter at present as any statement could upset Disney. But Comcast doesn’t seem to relent until Murdochs say no or Disney makes it impossible for Comcast to continue with its bid.

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