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Comcast Drops Out of Bidding War With Disney for 21st Century Fox Assets to Focus on Sky

Comcast Corp. has bowed out of its bidding war with Disney to acquire major 21st Century Fox assets, and instead focus on acquiring the European satellite TV provider Sky. Comcast’s move clears the way for Disney to take control of  the Murdoch family’s Fox assets and intensify a looming battle with Netflix and other video-streamers for media-industry dominance.

“Comcast does not intend to pursue further the acquisition of the Twenty-First Century Fox assets and, instead, will focus on our recommended offer for Sky,” the company said in a statement Thursday.

Disney and 21st Century Fox have agreed to a $71.3 billion deal that will see Disney take control of the bulk of Fox’s assets, including the 20th Century Fox film and TV studio, FX Networks, National Geographic Partners, and Fox’s 30% stake in Hulu. Comcast and Fox, and by association Disney, are still competing to buy London-based Sky, in which 21st Century Fox has a 39% stake.

“Our incredible enthusiasm for this acquisition and the value it will create has continued to grow as we’ve come to know 21st Century Fox’s stellar array of talent and assets.” said Disney chairman-CEO Bob Iger. “We’re extremely pleased with today’s news, and our focus now is on completing the regulatory process and ultimately moving toward integrating our businesses.”

Comcast’s challenge to Disney over the 21st Century Fox deal marked the most high-profile M&A contest in media in 25 years, since Sumner Redstone and Barry Diller went to war over Paramount Pictures. Comcast’s decision to back down from Fox came after institutional investors and bondholders expressed concern about the debt load the cable giant would pile up to pursue an all-cash offer significantly higher than the $65 billion bid it fielded on June 13. The government’s decision to appeal the court decision in the AT&T-Time Warner anti-trust trial that allowed those companies to merge was also a factor in Comcast’s decision to give up the chase on Fox.

“I’d like to congratulate Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company,” Comcast chairman-CEO Brian Roberts said in a statement Thursday.

Comcast, Disney, and Fox are still grappling over Sky. 21st Century Fox is in the midst of making a bid to take over the 61% of Sky it does not already own, an effort it has been pursuing since it stuck a deal to take over Sky in 2016. Fox’s hope is to deliver a wholly owned Sky to Disney as part of the larger transaction. But Fox’s effort to acquire Sky has been bogged down in a long regulatory review in the U.K. amid concerns about the level of influence exerted by the Murdoch family in the U.K. media market, given News Corp.’s ownership of major newspapers.

Comcast made a $31 billion offer for Sky in April. Fox on July 11 raised its bid for Sky to $32.5 billion, and Comcast topped it the same day with an offer of $34 billion, which has been endorsed by the Sky board committee evaluating takeover offers. It’s expected that Fox, with support from Disney, will make another run at Sky. The Sky board’s endorsement of the Comcast offer set in motion a 60-day timeline for Sky shareholders to consider the deal before a vote. That timeline also creates a deadline for Fox and other potential suitors to come forward with rival offers.

Disney has talked up Sky as a crucial component of its bid to build a global streaming platform for movie and TV content. Sky’s reach in the U.K., Ireland, Germany, Italy and other parts of Europe is extremely valuable to Disney and Comcast, as both have relatively small footprints outside the U.S. Comcast has in recent months worked to bolster its NBC News presence in Europe. News has already made efforts to bulk up overseas with the 2017 purchase of a 25% stake in France-based Euronews.

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