June 12 marks the day that D.C. federal judge Richard Leon has set for a ruling in the government’s anti-trust trial against the AT&T and Time Warner merger. The decision there will greatly influence Comcast’s ability to make a run at the assets that 21st Century Fox plans to sell in its $52.4 billion deal with Disney, namely the 20th Century Fox studio, FX Networks, regional sports cablers, and National Geographic Worldwide channels.
June 14 is the deadline for European Union regulators to weigh in on Comcast’s pending $31 billion bid to buy out satcaster Sky. A controlling stake in Sky is among the assets Disney hopes to inherit from 21st Century Fox, but Comcast has also mounted a competing $31 billion bid for all of Sky. The EU must decide by June 14 whether to approve the potential transaction or open up a formal inquiry that could take months, according to a report Monday by Reuters. A source confirms that Comcast made a regulatory filing recently that started the clock ticking on the EU’s decision-making timetable.
Comcast has also been inquiring with bankers about the potential for financing of an all-cash bid for Disney, should the conditions be favorable in the AT&T-Time Warner ruling, as first reported by Reuters. A source close to the situation cautioned that no final decisions have been made about a full-tilt push at a 21st Century Fox counteroffer to the Disney deal. The flurry of news about Comcast’s renewed activity on the 21st Century Fox front came the day before Disney reports its first-quarter earnings on Tuesday.
Comcast is said to be cautiously optimistic about the potential for the judge to rule in favor of AT&T-Time Warner, which would indicate a warmer environment for mega-media mergers. And Comcast is confident it can raise the financing for a rich all-cash bid if need be.
Disney and Fox last month laid out the rationale and backstory of the deal in a Securities and Exchange Commission filing, which included details of Fox’s discussions with Comcast prior to setting the Disney agreement on Dec. 14. The filing turned out to be a blueprint for Comcast in refining the structure of its offer, starting with ditching a cash-and-stock combo to an all-cash offer and agreeing to a high breakup fee. The expectation on the Comcast side is that a higher all-cash offer from Comcast to Disney’s cash-and-stock bid would force 21st Century Fox to engage in takeover talks. And it would also put pressure on Disney and its stock as the company would likely be forced to raise its price for Fox to preserve the deal.
Disney has so far kept mum on Comcast’s pursuit of Sky. Both Disney and Comcast see Sky as a vital platform for furthering their content and OTT strategies in international growth markets. Disney is already in line to own all of Sky if it is able to complete the deal for the 21st Century Fox assets. By U.K. law, Disney would have to make an offer for all of Sky if it were to acquire Fox’s 39% interest. Fox has been trying for more than a year to complete the buyout of the remaining stake that it does not own, but the sale has been effectively stalled by U.K. regulators. That opened the door to Comcast’s counteroffer.
The subject of the brewing M&A battle between Comcast and Disney is likely to come up for Disney chief Bob Iger Tuesday afternoon during the earnings call with Wall Street analysts.