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Behind the Offers and Counteroffers Culminating in the Landmark Disney-Fox Deal

Even on the day the deal was unveiled, it was still hard to believe.

Rupert Murdoch was hoisting the white flag, getting out of the entertainment business that he shaped and took to new heights with his News Corp. and 20th Century Fox empires. On Dec. 14, 2017, when Disney formally announced its all-stock $52.4 billion acquisition of 21st Century Fox, it sure seemed like the boldest, savviest, wiliest swashbuckler in media during the past five decades was hanging up his cutlass.

Or so it appeared.

“There’s nothing passive about anything that Rupert Murdoch does,” says Barry Diller, the chairman and senior executive of IAC. Diller has a long history with Murdoch, starting with Diller’s 1984-to-1992 run as head of 20th Century Fox — a tenure that encompassed the against-all-odds launch of Fox Broadcasting Co. as the nation’s fourth broadcast network in 1986.

As it turned out, the Disney-Fox announcement in the waning days of 2017 — complete with a picture of Disney chief Bob Iger and Murdoch in a triumphant moguls’ embrace — was the beginning of an extraordinary spree of bids and counterbids that would play out over the next nine months. Comcast’s dogged effort to wrest the Fox jewels away from Disney led to the most spirited public battle of the titans over entertainment assets since Diller went mano a mano with Sumner Redstone over Paramount Communications in 1993.

By mid-June, after much behind-the-scenes courting, Comcast made a $65 billion all-cash offer. The cable giant that also owns NBCUniversal went on a full-court PR and press campaign to make the case for why it should prevail — and why it wouldn’t be blocked by regulators in D.C.

Less than a week later, Disney put the hammer down and unveiled a $71.3 billion cash-and-stock bid — sweetened by nearly $20 billion — for the Fox assets, notably the 20th Century Fox Studio, FX Networks, National Geographic Partners, dozens of international channels and stakes in Hulu and Sky. But the determination of Comcast chairman-CEO Brian Roberts to scoop up Sky led to another round of skirmishes.
None of this surprised industry observers, least of all Murdoch, who was well aware of Comcast’s desire to crash Disney’s party from the flurry of overtures made in the weeks before Disney’s first formal bid was unveiled.

“If you know Comcast’s history since its very beginning there could be no surprises about their desire to grow,” Diller says.

Months before the Disney sale discussions began in August 2017, Fox had been trying to buy out the remaining 60% of Sky that it did not own. Disney had hoped that Fox would wrap that deal up in time to deliver 100% of the satcaster as part of the larger Disney buyout of Fox.

Franchises like “American Horror Story” will soon be part of the expanded Disney Universe.
Courtesy of FX

Fueled by fears of being outmaneuvered in the global content race by Disney, Comcast dove deep into the arcana of U.K. regulatory rules to barrel into the Sky auction. Fox had hoped to have a clear path to concluding a Sky deal after enduring an excruciating review that scoured everything from the Murdochs’ management of its U.K. newspapers to the sexual harassment scandals that enveloped Fox News across the Pond.

As the sides dug in, the personal component of the battle of the CEOs was impossible to miss. Iger made a point of palling around with Rupert Murdoch and his older son, Lachlan, during the annual Allen & Co. moguls retreat in Sun Valley, Idaho, in July. Roberts was a whirling dervish at the same retreat as he moved from conversations about the rise of cryptocurrencies to hunkering down with lieutenants on crafting a Sky bid. At the same time, there was still speculation that Comcast might make yet another offer to top Disney for the core Fox assets.

In the end, the Murdoch clan and shareholders of 21st Century Fox and European satcaster Sky were significantly richer. Comcast’s winning bid for Sky was an eye-popping $40 billion, nearly double the $23 billion valuation set with Fox’s December 2016 offer for all of Sky.

At 87, Rupert Murdoch proved that while he may be a lion in winter, he still has plenty of roar. The Murdoch saga will continue as he emerges with a smaller, TV-focused iteration of Fox following the Disney sale.

Starting with a single newspaper in his native Australia, Murdoch’s legend was forged by moves that “defied conventional wisdom and succeeded where others failed,” as Lachlan Murdoch noted during 21st Century Fox’s final shareholders meeting, held Nov. 14 on the Century City lot that the Murdochs have owned since 1985.

Lachlan Murdoch will take the helm of Fox as CEO, with his father serving as chairman of the company rooted in the Fox Broadcasting Co. network and its 28 O&Os, Fox News and Fox Sports. It amounts to a fresh start with a cash-flush balance sheet for the Murdochs.

“If you know Comcast’s history since its very beginning there could be no surprises about their desire to grow.”
Barry Diller

Diller, for one, doesn’t entirely buy the rationale that 21st Century Fox needed to sell out because the company simply wasn’t big enough to compete with the new generation of global tech behemoths a la Facebook, Amazon and Netflix.

“I don’t see that as an existential issue,” Diller says. “There is so much demand for product and there are so many routes to getting your product to market, many more than there have been at any time historically.”

So maybe Rupert really sought a change of scenery amid reports of strain in the generational transition he effected in installing Lachlan as chairman of 21st Century Fox and his brother James as the company’s CEO in 2015.

During the past 12 months, the Murdochs have greatly expanded the family’s wealth. And Rupert Murdoch will undoubtedly begin to exert some influence at Disney as the family members collectively rank as the largest individual shareholders in Disney.

Whatever may come, it’s clear that the final chapter in the Rupert Murdoch Story is still being written, as Lachlan noted to investors.

“It began with my father’s unwavering belief in the power of innovation and consumer choice,” he said on Nov. 14. “He has always had a passion for engaging audiences with stories and experiences that endure, but perhaps the most enduring story is his own.”

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