×

Wall Street Watches as Comcast and Disney Gird for Battle Over 21st Century Fox Assets

Comcast’s stock price has taken a hit during the past month since the cable giant confirmed its intention to mount a $31 billion bid for majority control of Sky, the European satellite TV provider that was expected to be part of Disney’s acquisition of key 21st Century Fox assets.

But on Thursday Wall Street seemed to cheer the idea of Comcast moving deeper into a bidding war with Disney over Sky and possibly all of the Fox assets included in the $52.4 billion deal that Fox and Disney clinched on Dec. 14. Comcast shares were up 2.7% in trading Thursday, closing at $31.56, amid a swirl of headlines about steps Comcast is taking to build a war chest for an all-cash offer for the 21st Century Fox assets that could reach $60 billion or more. Comcast shares fell nearly 12% from early March when the company affirmed its intention regarding Sky.

The Financial Times reported Thursday that Comcast would agree to pay 21st Century Fox a $2.5 billion breakup fee if a Comcast-Fox deal was blocked by regulatory hurdles in the U.S. Comcast had not previously included a breakup fee commitment in negotiations with Fox executives last November and December before the Disney agreement was reached, according to a Securities and Exchange filing detailing how the Disney-Fox union came together. The absence of a breakup fee from Comcast was a significant factor in Fox’s preference for Disney’s all-stock offer, in addition to the tax savings that come with a stock-swap deal.

Sources close to the situation say Comcast will likely wait until a judge issues a decision in the AT&T-Time Warner anti-trust trial before launching a full-tilt push to buy the 20th Century Fox Studio, FX Networks, National Geographic Worldwide, and 18 regional sports cablers, as well as Fox’s stakes in Sky and Hulu. Speculation in media and legal circles is growing that U.S. District Court Judge Richard Leon will rule in favor of the AT&T-Time Warner deal proceeding. A favorable ruling against the Justice Department’s effort to block AT&T-Time Warner on anti-trust grounds is expected to spur a burst of buying and selling in the media sector.

The Disney-Fox deal already has revved up the media M&A marketplace and the level of anxiety among leaders of traditional media firms. The conventional wisdom is that the major media congloms that have dominated film and TV for the past 25-plus years now need to grow even bigger to compete with the deep pockets of Netflix, Amazon, and Apple as the digital upstarts muscle into Hollywood’s core business.

Comcast and Disney are already on track to spar over the takeover of Sky. 21st Century Fox has been trying to buy up the remaining 61% of the satcaster that it does not own but the sale process has been bogged down by U.K. regulators. Disney expects to inherit Fox’s existing 39% stake in Sky, if not the whole company if Fox is able to close the $15 billion takeover of Sky set in December 2016.

As Comcast takes its first steps to lining up financing for a sweetened offer that will top Disney’s bid by a double digit margin, analysts see an old-fashioned bidding war erupting. Disney is not likely to back down easily from its Fox deal or for Sky specifically, after making the case for why the deal was important to Disney’s long-term goal of building a global direct-to-consumer streaming platform.

“It is reasonable to expect Disney to counter any potential offer while also changing the composition of its current all-stock offer. In our view, Comcast and Disney are likely to view this as the last remaining transformational deal in media,” analyst Scott Goldman of Jefferies wrote in a May 8 note.

More Biz

  • David Lubliner Moves to UTA From

    Veteran WME Agent David Lubliner to Join UTA

    William Morris Endeavor agent David Lubliner is departing the company for a post at United Talent Agency, individuals familiar with the move told Variety. The parting of ways was amicable, the insiders added. Lubliner was a veteran in WME’s motion picture literary department. Rumors of his exit had been floating since Hollywood reopened for the new [...]

  • Bruce Tufeld Dead: Hollywood Agent and

    Hollywood Agent and Manager Bruce Tufeld Dies at 66

    Bruce Tufeld, a Hollywood agent and manager who once repped stars like Rob Lowe, Laura Dern, and Kelsey Grammer, died Tuesday in Los Angeles as a result of complications from liver cancer. He was 66. The son of respected television announcer Richard “Dick” Tufeld and Adrienne Tufeld, Bruce began his career as an assistant at ICM [...]

  • R Kelly protest

    Protesters Rally Outside Sony Music Headquarters, Demand the Company Drop R. Kelly

    Standing in the cold with megaphones outside of Sony Music’s New York headquarters, a group of activists delivered the company, parent of Kelly’s longtime label RCA, a petition signed by over 217,000 people demanding that the singer be dropped from the label. The rally comes less than a week after a plane carrying a banner [...]

  • Robert Smith, Longtime Executive at DuArt

    Robert Smith, Longtime Executive at New York's DuArt Film Labs, Dies at 88

    Robert Smith, a longtime executive with New York’s DuArt Film Labs, died Jan. 11 in Montvale, N.J. He was 88. Smith spent some 62 years with DuArt, the film processing and post-production facility founded in 1922 in the penthouse of an automobile garage in Midtown. Smith rose to president of DuArt before retiring in 2015. [...]

  • Fake Washington Post

    Fake Editions of Washington Post Distributed in D.C.

    The Washington Post was forced to issue a statement on Wednesday morning after commuters were handed fake print copies of the newspaper with a headline claiming President Donald Trump had fled the White House. “There are fake print editions of The Washington Post being distributed around downtown DC, and we are aware of a website [...]

  • Stock market Stock buyback

    Stock Buybacks Leave Firms Without Funds to Invest in Future (Column)

    Corporate giants on the S&P 500 have spent more than $720 billion during the past year on stock buybacks. Media and entertainment firms account for only a fraction of that spending, but even $1 million spent on share repurchases seems a foolhardy expenditure at this transformational moment for the industry. The record level of spending [...]

  • Sinclair Enters Streaming Arena With Local

    Sinclair Enters Streaming Arena With Entertainment Bundle and Local Channels

    Sinclair Broadcast Group is diving into the increasingly crowded streaming platform arena with the launch today of Stirr, a free OTT entertainment bundle offering local news and general entertainment, sports and lifestyle channels. Sinclair aims to leverage the near-national reach of its sprawling station group with its strong local presence in markets across the country [...]

More From Our Brands

Access exclusive content