Arthur J. Villasanta – Fourth Estate Contributor
Philadelphia, PA, United States (4E) – Philadelphia-based Comcast Corporation, the largest broadcasting and cable television company in the world by revenue, has formalized a $65 billion all-cash bid for most of 21st Century Fox.
Comcast’s bid covers 21st Century Fox units currently in an agreement to be acquired by The Walt Disney Company, and represents a 19 percent premium over Disney’s offer. In December 2017, Disney agreed to buy the majority of Fox for $52.4 billion in stock.
The deal included Fox’s movie studios; the National Geographic, FX and Star TV networks, and stakes in Sky, Endemol Shine Group and Hulu (the streaming service with 20 million viewers), as well as regional sports networks. The Comcast bid will trigger a high-stakes bidding war between Comcast and Disney, two of the biggest players in media and telecom.
21st Century Fox is the United States’ fourth-largest media conglomerate after The Walt Disney Company, Comcast and AT&T. Its assets include the Fox Entertainment Group (owners of the 20th Century Fox film studio); Fox television network and Fox News channel, among others.
Comcast is the largest cable TV company and largest home Internet service provider in the United States. If it’s successful, these assets will increase Comcast’s international reach, and boost its entertainment portfolio at a time when more and more of its subscribers are ditching cable for internet-delivered video services such as those from Netflix.
“These are highly strategic and complementary businesses, and we are in our minds the right buyer,” said Comcast CEO Brian Roberts. He also said, “We were disappointed when (Fox) decided to enter into a transaction with The Walt Disney Company, even though we had offered a meaningfully higher price.” But he said Comcast is “pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal.”
Comcast believes it’s better to offer cash because the market allows for a higher leverage ratio from a cable company with strong cash flows than a media company like Disney, which is accustomed to carrying lower leverage ratios.
Comcast’s move on Fox came a day after a federal judge approved AT&T’s $85 billion acquisition of Time Warner on June 12. On June 14, AT&T announced it had completed its $85 billion acquisition of Time Warner a week ahead of schedule.
Comcast was in talks to buy Fox in late 2017, but lost out to Disney in part because major Fox investors weren’t sure the proposal would win over government regulators. At around the same time, the Department of Justice sued to block the AT&T-Time Warner deal.
Fox’s board will need to determine whether Comcast’s offer is reasonably likely to be better than Disney’s. If they do, they will start negotiating with Comcast.
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