The Disney-Fox mega merger—one of the biggest deals in history—is facing another potential obstacle as reports emerge that Comcast may be preparing an attempt to trump Disney in the $52.4-billion deal.
Media reported late on Monday that Comcast is speaking with investment banks about an all-cash bid to thwart Disney’s takeover of Twenty-First Century Fox Inc.’s assets.
According to Reuters, citing unnamed sources, Comcast is asking investment banks to increase the bridge financing facility they have already arranged for the Sky offer by as much as $60 billion to finance the Fox bid.
It’s not the first time that Comcast has tried to dip its toes in Fox waters. Comcast originally bid $34.41 per share for Fox’s entertainment portfolio, but Fox went with Disney’s lower original offer of $23 per share, which was then increased to $28 per share in August. The final share value was $29.54 per share—Disney’s December 13 closing price.
Fox rejected Comcast’s bid over antitrust issues, and now Fox billionaire Rupert Murdoch is also trying to beat out Comcast for control over British Sky Plc, with a little help from Disney.
The rivalry started heating up further in April, when media reported that Disney could step in to buy Sky News if Fox acquired Sky. This maneuver would get them over a regulatory hurdle in the UK, where authorities fear that control of Sky would give Murdoch too much influence over British media. Rumors began circulating that Murdoch was prepared to increase his original $16.4-billion offer for Sky.
But Comcast wants to buy all of Sky and it’s already bid $31 billion—a deal being considered by regulators in the European Union, which should decide on June 14 whether or not they would approve the deal or let the courts handle it. Related: Why Buffett Isn’t Bullish On Gold
If Comcast indeed now tries to outbid Disney further, this game will reach fever pitch. Comcast is a Disney main U.S., controlling NBC Universal, and Disney isn’t keen to let it get its hands on Sky. Now, Comcast is going for the juggler.
The importance of the Fox deal to both Disney and Comcast shouldn’t be underestimated. Fox would give either of them the highly-sought-after access to European and Asian markets. It would also give one or the other access to major blockbuster franchises (think X-Men, Deadpool, The Simpsons, Avatar, etc).
And then we have Hulu, the key streaming-service rival to Netflix, which Fox owns 30 percent of. But Disney and Comcast also each own 30 percent of Hulu, so whoever gets Fox gets 60 percent. Comcast could throw a few roadblocks in the way of Disney’s acquisition of another 30-percent stake in Hulu, too, but it’s risky because Disney’s response could very well be to create its own streaming service and take people away from Hulu.
So what are the chances of Comcast squashing this mega deal for Disney? Right now, it’s anyone’s guess who will win this game, but Comcast has a number of tricks up its sleeve.
No one knows yet whether Comcast will make a bigger offer or not. Right now, it’s likely weighing the probability of running into too many regulatory hurdles. While everyone has been keeping a close eye on the massive AT&T-Time Warner antitrust trial, they will be glued to it even tighter now because Comcast will want to know if it’s worth counter-bidding.
By Fred Dunkley for Safehaven.com
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