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Comcast Says It’s Ready to Outbid Disney for 21st Century Fox

Confirming weeks of rumors, Comcast said Wednesday that it is in “advanced stages” of preparing an all-cash offer for entertainment assets of 21st Century Fox — in a move to outflank Disney’s $52.4 billion offer for Fox.

Comcast said that any offer for Fox would be at a “premium to the value of the current all-share offer from Disney,” but it didn’t reveal an anticipated price tag. The media conglomerate added that the structure and terms of its bid for the 21st Century Fox assets — including regulatory-risk provisions and the termination fee it would be required to pay — would be “at least as favorable to Fox shareholders as the Disney offer.”

Under the terms of Disney’s proposed deal for Fox, announced in December 2017, the latter would be on the hook to pay a breakup fee of $1.52 billion if Fox pulls out of the pact for any reason not related to a regulatory block of the transaction.

In its statement, Comcast continued: “While no final decision has been made, at this point the work to finance the all-cash offer and make the key regulatory filings is well advanced.”

Comcast is going public with its plans for a potential rival offer for the Fox assets ahead of 21st Century Fox’s shareholder vote on the Disney proposal, expected to occur sometime this summer.

In premarket trading Wednesday, 21st Century Fox shares rose 1.4% and Comcast’s stock fell 2.1%. Shares of Disney were down 0.9%.

Disney reps didn’t respond to a request for comment. 21st Century Fox declined to comment.

On Fox’s most recent quarterly earnings call on May 9, 21st Century Fox executive chairman Lachlan Murdoch, asked about a potential Comcast spoiler bid, responded that “we are committed to our agreement with Disney and are working through the conditions to bring it to a closing” but added that the Fox board is “of course are aware of their fiduciary duties on behalf of all shareholders.”

Comcast had already made an offer for Fox that topped Disney last year — and was rejected by 21st Century Fox’s board. According to SEC documents related to the Disney-Fox deal, Comcast engaged in extensive talks in November and December and was ready to move on a $34.41-per-share offer versus Disney’s offer at the time of up to $66 billion, or $28 per share and the rest in cash.

Per the SEC filing, on Nov. 28, Fox held a board meeting via conference call to discuss the competing offers from Disney and Comcast. It concluded that a deal with Disney was “a better strategic fit, with greater cost synergies and more opportunities for innovation, and the relative attractiveness of the resulting equity currency in a combined Disney-21CF,” according to the filing. 21st Century Fox also was worried that a Comcast pact would present bigger regulatory risks.

Comcast’s renewed move to play spoiler in Disney’s industry-shaking pact to acquire big chunks of Rupert Murdoch’s media empire comes amid a broader landscape of media M&A — and the attendant uncertainty that’s generating.

Most notably, AT&T is waging a legal fight with U.S. regulators to complete its $85 billion deal for Time Warner. Meanwhile, Comcast separately has launched a $31 billion offer for Sky, seeking to top 21st Century Fox’s takeover offer for the U.K. satellite TV operator. CBS and Viacom are wrestling in court, as the broadcaster is battling Shari Redstone’s move to merge the two.

Comcast is seeking to acquire the Fox assets Disney has spoken for. Those include the 20th Century Fox film and TV studio; a cable programming group that includes FX Networks, National Geographic and more than 300 international channels; and 22 regional sports networks. In addition, they would include 21st Century Fox’s 30% stake in Hulu (in which both Disney and Comcast also own 30% stakes), 50% share of Endemol Shine Group, the Star India satellite service, and Fox’s 39% interest in Euro satellite broadcaster Sky.

The “New Fox” — which would be what remains if a deal with Disney or Comcast were consummated — will revolve around TV assets including the Fox Broadcasting Co. network and its TV station group, along with Fox News Channel, Fox Business Network and Fox Sports operations. 21st Century Fox gave the first glimpse of its plans for the Fox network in the New Fox era at its upfronts presentation last week to advertisers in New York.

Last week, 21st Century Fox announced its expected leadership team for New Fox, headed by Lachlan Murdoch as chairman and CEO. Rupert Murdoch will be co-chairman of New Fox, and John Nallen, currently CFO of 21st Century Fox, will serve as COO.

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