Comcast is preparing bid for Fox TV and movie assets, rivaling Disney’s offer

Comcast said it is preparing a bid for the large swath of 21st Century Fox that Disney had planned to buy.
Comcast said it is preparing a bid for the large swath of 21st Century Fox that Disney had planned to buy.
(Matt Rourke / Associated Press)

Comcast Corp. is serious about disrupting Walt Disney Co.’s plan to acquire much of Rupert Murdoch’s 21st Century Fox.

On Wednesday, after weeks of speculation, the Philadelphia cable giant confirmed that it is in the advanced stages of preparing an all-cash offer intended to trump Disney’s $52.4-billion stock bid. Comcast said its potential offer would be “superior” to Disney’s proposal.

The stakes are enormous: The power play could determine which media company — Disney or Comcast — will wind up being the dominant entertainment company in Hollywood and beyond.

“While no final decision has been made, at this point the work to finance the all-cash offer and make the key regulatory filings is well advanced,” Comcast said in a statement.

Comcast already controls internet and cable systems and NBCUniversal, which owns the NBC network, cable TV channels including USA, Bravo, E! and the Golf Channel, the Universal Pictures film unit and Universal Studios theme parks. The company wants to get even bigger to compete against tech giants Netflix, Facebook, Google and Amazon that have invaded the entertainment space.


Comcast stock fell nearly 2% to $31.88. Disney shares slipped 1.2% to $102.89. Fox, meanwhile, saw its shares rise 1.6% to $38.77.

Analysts speculated that the price for the Fox assets — which include the prolific 20th Century Fox film and television studios, 22 regional sports networks, FX and National Geographic channels — just increased by at least $10 billion.

That is because Comcast’s bid is expected to top $60 billion, an amount that probably will force Disney to up its ante — a prospect that Fox investors probably would welcome.

“Disney is in a strong position to compete with a higher bid from Comcast,” media analyst Michael Nathanson wrote in a report Wednesday. “We would expect Disney to match that higher bid with $10 billion in cash added in to its existing deal.”

Disney and Fox declined to comment.

A renewed Comcast bid would be a direct challenge to Disney Chief Executive Bob Iger, whose effort to buy much of Fox has been viewed as a bold move to cement his legacy and secure Disney’s future.

“Disney CEO Bob Iger has never backed away from making the right long-term strategic moves for his company because of price,” Nathanson said.

Disney wants the Fox assets — including Fox’s stake in the Hulu streaming service — to bolster its TV and movie holdings and its direct-to-consumer streaming services. Disney launched an ESPN-branded service this spring and has been busy developing a second service — with Disney movies and television shows — that should launch sometime next year.

Even before Disney announced in December its bombshell bid to acquire 21st Century Fox’s movie and TV production assets, Comcast had been lurking in the background as a rival.

In early November, Comcast Chief Executive Brian Roberts approached Fox Chairman Rupert Murdoch to discuss such a union — but Murdoch was cool to Roberts’ overture. The rub for Murdoch came down to the amount of the break-up fees that Comcast had offered and the company’s struggles to get big deals approved by government regulators.

Comcast abandoned a bid for fellow cable and Internet provider Time Warner Cable in 2015 after the U.S. Justice Department said it would try to block that merger.

Some observers also believe that the Justice Department regrets consenting to Comcast’s acquisition of NBCUniversal in 2011, and that the department might clamp down should Comcast try to get even bigger.

Fox executives rejected Comcast’s bid, which was 16% higher than Disney’s, because they believed that the chances of regulatory approval were better for Disney. In addition, the Disney deal would turn Fox shareholders, including Murdoch and his family, into Disney shareholders. The Murdoch family would become one of Disney’s largest individual shareholders, with about 5% of the company’s stock.

Both combinations probably would trigger considerable regulatory scrutiny. Disney and Fox, combined, would control about 40% of the domestic box office because Disney has churned out so many blockbusters in recent years.

In addition, Disney already bills itself as the “worldwide leader in sports” because of its majority stake in the sports juggernaut ESPN. Adding Fox’s 22 regional sports networks, including Fox Sports West and Prime Ticket in the Los Angeles region, could trigger antitrust concerns.

A Comcast-Fox deal also would be problematic, according to analysts, because Comcast is the nation’s largest high-speed internet provider. Streaming services, such as Netflix, probably would protest any move by Comcast to get bigger.

Comcast is not expected to make a move for Fox until mid-June, at the earliest, according to two knowledgeable people who were not authorized to comment publicly.

Disney clinched the Fox deal soon after the government in November brought a lawsuit to block AT&T Inc.’s $85-billion acquisition of Time Warner Inc., which includes HBO, CNN and the Warner Bros. movie and television studio.

Analysts believe that the Department of Justice failed to make a convincing case against the AT&T-Time Warner merger during a two-month trial that played out in Washington this spring. The judge is expected to rule on that merger by June 12.

Should AT&T be permitted to buy Time Warner, Comcast probably would consider that a green light to make a second run at Fox.

Comcast is offering cash, in part because it does not want to further dilute the stakes of its shareholders, including Roberts and his family. Comcast’s stock has plummeted more than 20% since earlier this year when speculation intensified that Comcast would aggressively bid for the Fox assets.

Comcast initially offered Fox a stock deal but changed course after Comcast’s shares plunged. Comcast concluded that a more predictable path was an all-cash deal. Its cable TV and high-speed internet businesses generate significant cash, which would give lenders some comfort that the company could handle more debt.

However, a Comcast all-cash deal would bring considerable tax considerations for individual shareholders, such as the Murdochs.

Last month, Comcast began its chess moves by making a $31-billion offer for European television provider Sky, which Disney also wants. Fox currently owns 39% of Sky, but it has struggled to win the British government’s approval to buy the remaining shares. Sky has lucrative sports rights, including the Premier League of soccer, so the service would give either Comcast or Disney international exposure and even more sports to broadcast.

“If Comcast is able to acquire Fox and Sky, the company would strengthen its must-have content war chest,” Timothy Horan, an analyst with Oppenheimer & Co., said in a recent report. “And Comcast has a great track record on acquisitions.”


4:05 p.m.: This article was updated with analyst commentary and more background information and context.

9 a.m.: This article was updated with additional background information and context.

This article was originally published at 6:55 a.m.