UPDATED with analysis: Comcast, after being spurned in its initial pursuit of 21st Century Fox, apparently is preparing to challenge Disney’s $52.4 billion deal to acquire most of the studio’s film and TV assets, according to reports.
Reuters reports that Comcast is speaking with investment bankers about obtaining bridge financing for an all-cash offer. It’s waiting for a federal judge to issue a ruling next month in the Justice Department’s challenge to the AT&T-Time Warner merger before making its move, the news organization says.
Media analyst Rich Greenfield predicted Comcast would make another run at Fox, in part because the deal would give Disney “unprecedented control” over the legacy media landscape. The combined film studios account for more than 40% of the domestic box office, and Disney’s control of ESPN and Fox’s regional sports networks would give it serious leverage in negotiations with pay TV companies. This calculus doesn’t even take into account the competitive threat of the tech giants, which have direct relationships with consumers and billions to spend on content.
“With AT&T acquiring Time Warner and Viacom/CBS highly likely to merge in the coming weeks, there is no other obvious way for Comcast to scale their content assets, expand their distribution presence globally and stymie Disney beyond renewing their efforts to acquire Fox at a meaningful premium to Disney,” Greenfield wrote. “If AT&T-Time Warner is ruled legal and closes, we expect a new Comcast bid for Fox immediately. But before we get to if/how that is possible, let us first analyze why their prior efforts to buy Fox failed in second half 2017.”
Last fall, Comcast laid out a substantially richer bid for Fox than the one Disney proposed: $34.41 a share, according to regulatory filings. But Fox’s board, mindful of potential regulatory obstacles, ultimately chose the Disney offer.
Comcast telegraphed its intentions to disrupt Disney’s plans for Fox when it announced it would mount a challenge to Fox’s $16 billion bid to take full control of Britain’s pay TV giant Sky, with its international distribution and film and television production capabilities.
Disney CEO Bob Iger once described Sky as a crown jewel among Fox’s assets, telling Bloomberg, “Sky is just an amazing platform. Not only does it provide a great consumer experience in terms of access to the programming but also creates a lot of great programming from sports to news to all forms of entertainment.”
However, Fox’s bid for Sky has faced regulatory hurdles in the UK because of fears that it would give the Murdoch family too much control over British media.
Comcast formally notified European Commission today of its plans to bid for Sky, starting the clock on a regulatory review. It also disclosed details of its approximately $30 billon bid in its recent quarterly earnings report.