Turning up the heat on Comcast Corp., Walt Disney Co. and 21st Century Fox jointly set a new date — July 27 — for their shareholders to approve Disney’s proposed $71.3-billion takeover of Fox assets.
Thursday’s scheduling move, outlined in a regulatory filing, increases the pressure on Comcast to either raise its bid for the Fox assets or abandon its campaign. Earlier this month, Comcast offered $35 a share, or $65 billion in cash, for the Fox television and movie studios, FX, National Geographic, regional sports networks, Fox’s 30% stake in streaming service Hulu and valuable international television businesses.
Disney then raised its bid for the same assets to $38 a share, and Rupert Murdoch and other members of Fox’s board quickly approved the enhanced Disney offer. Disney Chief Executive Bob Iger is eager to buy the assets, which would give Disney more distribution outlets overseas and more programming for the proposed Disney-branded and Hulu streaming services.
On Wednesday, Disney reached an important milestone by winning the approval of the U.S. Justice Department for the proposed acquisition. To win the government’s blessing, Disney agreed to divest Fox’s 22 regional sports channels — including Prime Ticket and Fox Sports West in Los Angeles, Fox Sports San Diego and YES network in New York — within three months of the deal closing.
Disney already owns 80% of ESPN, and the government believed the Burbank entertainment giant would have the power to squeeze pay-TV distributors and advertisers if it controlled both the national and local sports TV markets.
The Justice Department’s review of the Disney-Fox deal was speedy. Disney filed for regulatory approval Feb. 1, and the antitrust regulators spent just five months scrutinizing the consolidation. In contrast, the Justice Department spent nearly a year looking into the AT&T-Time Warner deal before its ill-fated decision to sue to try to block that combination.
It's unclear exactly why the Disney-Fox deal won government approval so much more quickly.
The two deals differ in structure: Disney and Fox compete in the same fields, while AT&T and Time Warner brought together a distribution company and a company that produces content.
Disney agreed to a concession quickly, while AT&T refused to divest assets.
The Justice Department approved the Disney-Fox deal shortly after fighting the AT&T-Time Warner deal and suffering a defeat in court.
In addition, President Trump had a problem with the AT&T-Time Warner deal, saying it was "too much concentration of power in the hands of too few." He also frequently expresses his disdain for CNN’s coverage of him. CNN is part of WarnerMedia. In contrast, Trump in December signaled his approval for the Disney-Fox deal by calling his friend Murdoch and congratulating him.
“This conditional approval comes just 6 smonths after the deal was announced and is quite unprecedented in terms of timeline,” Barclay’s Bank media analyst Kannan Venkateshwar wrote Thursday in a research note. “For context, Disney had expected a 12-18 month review process.”
Comcast has been trying to piece together additional financing to make a higher bid. But the government’s “approval makes it tough for Comcast to engage with Fox shareholders meaningfully unless it comes up with a significantly higher or more attractive offer in some form to account for the potential delay in the approval process,” Venkateshwar wrote.
Fox had originally scheduled a July 10 shareholder vote, but it postponed that meeting after Comcast made its offer. Murdoch and other members of Fox's board are recommending that Fox investors approve the sale to Disney.