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Comcast, Disney Keep Focus on 21st Century Fox Assets Despite AT&T-Time Warner Battle

Comcast and Disney are staying focused on the prospect of bidding for key 21st Century Fox assets despite the concern about the climate for media mergers raised by the Justice Department’s decision to fight the $85 billion union of AT&T and Time Warner.

Sources say Fox is continuing to engage in very preliminary discussions with Comcast, Disney, and other potential suitors about a sale process of the 20th Century Fox film and TV studio, the FX Networks and National Geographic cable group, Fox’s 30% stake in Hulu, and international TV platforms including Star India and its 39% interest in Euro satcaster Sky. A source said executives at Comcast and NBCUniversal are “being very serious” in studying the Fox assets and trying crunch the numbers with publicly available information. Fox is not believed to have progressed to the point of sending out briefing books or asking potential bidders to sign non-disclosure agreements.

Reps for Fox and Comcast declined to comment. A rep for Disney did not respond to a request for comment.

As the M&A spotlight stays on Fox, media analyst Michael Nathanson of MoffettNathanson did some number crunching of his own to come up with estimated enterprise values for the Fox assets that might be sold and those that would stay behind with the Murdoch clan that controls 21st Century Fox.

According to Nathanson’s Nov. 20 report, the combined value of the assets believed to be on the block is estimated at around $48.5 billion, with the 20th Century Fox film and TV production operation and library valued highest at around $15 billion. Of the assets that would remain in the Fox or News Corp. fold — Fox Broadcasting Co. network, its TV stations, the Fox News cabler and Fox Sports national and regional cable operations — are estimated to have an enterprise value of about $45.1 billion, with cable networks providing the lion’s share of the value at about $40.6 billion.

Nathanson observes that the streamlined Fox without the studio and entertainment cable networks would still have clout with traditional and digital MVPDs thanks to the NFL and other sports rights held by Fox Broadcasting and the prominence of Fox News.

“With many pressures hitting the media industry Fox’s potential moves make immense sense,” Nathanson wrote. “Paring down their asset base would not change this hand and would underscore the massive relative value here.”

The Justice Department’s lawsuit seeking to block AT&T and Time Warner is a wild card that would have to be considered in any serious M&A effort involving Fox. AT&T chief Randall Stephenson warned earlier this week of the chilling effect the government’s stance would have on business transactions in the absence of clear “guideposts” for merger agreements. But at this early stage, the hunt for a few big pieces of Fox only appears to be heating up.

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