Documents filed with the Securities and Exchange Commission lay out intricate details of the corporate courtship — which, like any good Hollywood romance, entailed rival suitors who were ultimately spurned: Verizon and Comcast.
Disney CEO Bob Iger and Fox’s Murdoch met on August 9, for one of their occasional meetings to talk about the changing entertainment landscape and muse about the gathering challenges confronting media companies. They broached how best to respond — including the possibility of combining the two companies.
Five days later, 21st Century Fox executive chairman Lachlan Murdoch and CEO James Murdoch met with the CEO of another prospective suitor, believed to be Verizon, to discuss an all-stock transaction. Though Fox quickly determined it wasn’t interested in pursuing negotiations unless the offer would value the company above its current market valuation.
According to the filings, preliminary talks began in September between Disney and Fox, as senior executives — including Disney chief strategy officer Kevin Mayer and Fox chief financial officer John Nallen — talked about what mix of assets Disney might acquire, given regulatory considerations, and the tax implications of such a giant transaction.
By early October, it was clear that such a deal would be subject to “higher scrutiny” from federal regulators — and certain Fox assets would need to be spun off as a newly formed company. Senior executives of both companies met in New York on October 17, and the broad contours of the deal began to take shape, with Fox identifying which parts of the business would become part of what is now being called New Fox.
Iger and Rupert Murdoch met on October 25 to discuss the strategic merits of the transaction. At this point, the elder Murdoch stressed “the importance of Mr. Iger’s continued leadership of Disney” as critical to the successful integration of the two companies, according to the SEC filing.
Two days later, on a conference call, Disney laid a preliminary offer that valued Fox at $60 billion, or $23 a share, payable 60% in stock and the reminder in cash. Murdoch and others at Fox deemed this offer “inadequate,” and communicated as much on October 28.
It didn’t take long for news of the deal collapse to become public knowledge. CNBC reported Disney’s talks to acquire most of Fox’s assets, on November 6. That same day, Fox got an unsolicited call from another interested acquiring party, believed to be Comcast, interested in exploring a transaction.
Disney’s Mayer, meanwhile, contacted Fox’s Nallen to say the Burbank entertainment giant was considering improving its offer. Both parties agreed to resume negotiations.
Fox began holding discussions with Comcast on November 10, considering what assets would be acquired, reviewing the regulatory considerations and discussing financial considerations. Disney and Fox resumed talks the following day, on November 11.
On November 14, Comcast held a conference call in which it outlined a preliminary offer that was substantially richer than the one Disney proposed: $34.41 a share.
At Fox’s November 15 board meeting, directors discussed the status of ongoing talks with Disney and Comcast, the relative advantages of each potential combination, and regulatory considerations. The board saw greater obstacles in a prospective Comcast offer — noting the consent decree imposed on its earlier acquisition of NBCUniversal.
Talks with Fox and Comcast continued on a parallel path, with Comcast holding a conference call with Fox’s attorneys to discuss the regulatory risk and its willingness to accept divestitures or behavioral remedies to alleviate antitrust worries.
On November 19, Iger, Murdoch and other top executives met in Los Angeles to discuss the status of negotiations and Disney’s proposal to improve its offer to acquire Fox assets at a price of $28 per share payable entirely in stock.
Regulatory considerations, embodied in the government’s lawsuit to block the proposed merger of AT&T and Time Warner, ultimately favored Disney. A draft merger agreement was prepared on December 1 — with the deal announced December 14.
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