Comcast Looks to Wrest Fox Entertainment Assets From Disney

(Bloomberg) -- Comcast Corp. is ready to go to war with Walt Disney Co.

The cable giant confirmed on Wednesday that it may make an offer for a wide swath of 21st Century Fox Inc.’s entertainment assets, a business that Disney has already agreed to buy for roughly $52 billion.

The move threatens to escalate a bidding contest that’s already underway over Fox’s European satellite business -- and further complicate a global game of M&A chess that’s being waged by the biggest media companies.

Comcast “is considering, and is in advanced stages of preparing, an offer for the business that Fox has agreed to sell Disney,” the company said in a statement. “Any offer for Fox would be all-cash and at a premium to the value of the current all-share offer from Disney.”

While no final decision has been made, Comcast said its work to finance the offer -- and preparation to file key regulatory statements -- is “well advanced.” A person familiar with the discussions said earlier this month that Comcast was mulling such a step. Comcast was talking to investment banks about obtaining bridge financing for the all-cash deal, the person said at the time.

A counterbid would roil a plan by Disney Chief Executive Officer Bob Iger to bolster the company’s dominance in entertainment. Fox agreed in December to sell its film and TV studios, cable channels including FX and National Geographic and other assets to Burbank, California-based Disney in an all-stock deal. Comcast said at the time that it “never got the level of engagement needed to make a definitive offer.”

Disney plans to use the bigger stable of TV and movie properties in part to stream more content directly to consumers.

“If Comcast won these assets from the arms of Disney, it would be a devastating blow to Iger,” Daniel Ives, an analyst at GBH Insights, said in a note.

Cool Reception

Comcast investors gave a tepid reaction to the idea. The stock declined 2.2 percent to $31.80 on Wednesday. Even before the announcement, Comcast’s expansion plans have weighed on the shares, which were down 19 percent this year through Tuesday’s close.

Shares of Fox climbed as much as 2.4 percent to $39.06, while Disney declined up to 1.9 percent to $102.07.

Fox declined to comment on Comcast’s statement. After earlier reports that Comcast was considering a possible bid, Fox said it was committed to completing its deal with Disney.

“We’re not going to kind of engage in a lot of speculation around this,” Fox Executive Chairman Lachlan Murdoch said two weeks ago on a conference call following earnings.

Comcast is already making an ambitious push in Europe that centers on U.K. satellite broadcaster Sky Plc. After Fox made a takeover offer for the 61 percent stake in Sky that it doesn’t already own, Comcast launched a 22 billion pound ($30 billion) counterbid for the business. Disney also is interested in owning Sky.

Comcast won approval on Monday from the U.K. government to move ahead with its offer for Sky.

AT&T Case

Comcast’s plans for Fox, meanwhile, may hinge on the fate of another deal: AT&T Inc.’s attempt to acquire Time Warner Inc. If that transaction is thwarted on antitrust grounds, Comcast would have less reason to pursue Fox.

Like a Comcast deal for Fox’s assets, the AT&T proposal is an example of a large TV distributor attempting to own a TV programmer -- what’s known as a vertical merger. A judge is slated to rule next month whether to block or allow the AT&T transaction.

Both Disney and Comcast also are looking to expand overseas and offer more content directly to consumers. Fox’s assets would help both companies achieve these goals, said Paul Sweeney, an analyst at Bloomberg Intelligence.

That’s why a bidding war could be intense.

“Disney is likely to put up quite a fight,” he said.

©2018 Bloomberg L.P.

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