Twenty-First Century Fox Inc. signage is displayed outside the company’s headquarters in New York, U.S. (Photographer: Victor J. Blue/Bloomberg)

Comcast Bid for Fox Assets Threatens to Roil Disney's Deal Plans

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(Bloomberg) -- A high-stakes contest between the world’s largest media companies is poised to take another turn.

Comcast Corp. is lining up financing for a fresh run at buying 21st Century Fox Inc.’s entertainment assets, according to a person with knowledge of the situation. The move would counter Walt Disney Co.’s previously accepted $52 billion bid, which took the form of an all-stock offer.

A bidding war would further complicate a global game of M&A chess among media giants. Comcast has already made a 22 billion pound ($30 billion) offer to acquire the 61 percent stake in European pay-TV group Sky Plc that Fox doesn’t already own. Fox and Disney also are interested in buying the business.

If Comcast does make a play for Fox, “it is reasonable to expect Disney to counter any potential offer,” Jefferies LLC analyst Scott Goldman said in note. “Comcast and Disney are likely to view this as the last remaining transformational deal in media.”

But Comcast’s interest in Fox may be contingent on the fate of yet 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.

Disney investors may get a better sense of that company’s plans later on Tuesday, when it’s slated to report quarterly results.

Comcast is talking to investment banks about obtaining bridge financing for an all-cash bid, said the person, who asked not to be identified because the deliberations are private. Comcast is asking investment banks to increase the bridge financing line they have already arranged for the Sky offer by as much as $60 billion to finance the Fox bid, according to the person.

Comcast previously offered Fox at least 16 percent more for the assets than Disney, though regulatory concerns ultimately led controlling stockholder Rupert Murdoch to accept the lower bid.

A Comcast representative declined to comment. Meanwhile, the company filed for European Union approval for its bid for Sky, the EU said in an email on Monday. Comcast on Tuesday made binding promises to continue to finance Sky News and keep the service based in Britain as part of its effort to secure U.K. approval for the deal.

The latest takeover speculation, which was originally reported by Reuters, sent Fox shares up as much as 2.6 percent to $38.47 on Tuesday. They had been up 10 percent this year through Monday’s close.

AT&T Effect

Comcast, the nation’s largest cable company, is still considering whether to bid for Fox, according to the person. Key to that decision: whether government regulators are successful in court in blocking AT&T’s purchase of Time Warner.

Like Comcast buying many of Fox’s assets, that proposed deal is another example of a large TV distributor attempting to own a TV programmer -- what’s known as a vertical merger. A judge is expected to rule in June on whether to block or allow the AT&T transaction.

If the AT&T deal is approved, Comcast also may ultimately bid for 100 percent of Sky and the rest of Fox, CNBC reported. If Comcast does manage to consummate both deals, it would consolidate a wide swath of the media landscape, with the transactions totaling about $100 billion.

It also would generate a very heavy debt load for Comcast, Goldman said.

“The acquisitions of both Fox and Sky for nearly $100 billion in all cash would dramatically change the company’s leverage profile,” he said.

©2018 Bloomberg L.P.

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