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Comcast’s Fox Bid Throws Wrench Into Disney’s Merger Management Plans

Call it a big plot twist in the second act of a compelling corporate drama. Comcast’s $65 billion competing all-cash bid for 21st Century Fox adds a fresh layer of complexity and uncertainty for staffers on the studio’s Century City lot who were already bracing for big changes with the pending sale of key assets to Disney.

Comcast’s move comes just as some of the management picture for the enlarged Disney and the reconfigured New Fox was starting to come into focus. Now, the only sure thing is that Comcast’s move will prolong the process of settling the fate of 21st Century Fox’s studio, FX Networks, and National Geographic Partners divisions, among other assets.

The rival bid from Comcast means the 21st Century Fox board will have to engage with the cable giant on the details of the offer and its long-term plans for the Fox assets. Rupert Murdoch and other Fox leaders have already been vocal proponents of the $52.4 billion cash-and-stock Disney transaction, which was announced Dec. 13, but they are under fiduciary obligation to give consideration to Comcast’s offer, which is more lucrative on a purely financial basis. Moreover, the fact that Comcast is sailing in with a big counteroffer to Disney could stir up other bidders.

Comcast’s offer has sparked a new round of speculation about how the Fox divisions and their leaders might be integrated with the corresponding assets owned by NBCUniversal, notably the Universal Studios film operation and the NBCUniversal Cable Entertainment arm that houses USA Network, Syfy, Bravo, Oxygen and other cablers. Some executives at Fox lot have expressed a preference for Disney because it is perceived that there is less duplication compared to Comcast, particularly on the cable programming side.

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“Disney feels like the sexier option,” said a 20-year veteran of Fox on the TV side.

Some Fox insiders said “bring it on” to the notion of a bidding war for the company, given that so many employees have stock holdings in 21st Century Fox. But others have been groaning the past two weeks as it became clear that Comcast was determined to make a second run at prying the deal away from Disney. The fact that the sale process will likely be drawn out for at least a few more weeks is concerning to employees who were hoping to have a sense by year’s end of what the future would hold after the Disney deal.

After months of rumors and whispers, multiple sources confirm that 21st Century Fox co-president Peter Rice, who oversees all of Fox’s TV operations, has been on track to make the move to Disney in a senior management role and could potentially succeed Iger when his contract expires. Dana Walden, chairman-CEO of Fox Networks Group, is also said to be planning to join Disney as is FX Networks chief John Landgraf. Disney chairman-CEO Bob Iger has been on a charm offensive with Rice, Walden and other top Fox division heads, as he assembled a dream-team for the enlarged Disney, where TV content will be center stage in the company’s plans to launch global streaming services to compete with Netflix and Amazon.

However, Fox sources noted that the internal chatter about who’s going and who’s staying quieted down during the past few weeks as it became clear that Comcast would come back with a higher bid. But sources emphasized that regular business activity has continued at a brisk pace at the Fox assets that are in play. Nor have there been signs of unusual financial constraints. “It’s not like we’ve just folded our tents,” said one insider.

At Comcast and NBCUniversal, it’s not immediately clear how the leadership hierarchy would shake out if the Fox assets were to be absorbed. NBCU has well-established leaders at NBC in Bob Greenblatt and Mark Lazarus and Bonnie Hammer on the NBCUniversal Cable Entertainment side.

On the Fox film side, staffers are torn between which corporate parent they’d prefer. Some said they are rooting for Disney. Others believe that Comcast would provide a softer landing. Like Fox, the studio makes R-rated, adult fare and isn’t as focused on big-budgeted tentpole productions. That creative variety is appealing to some executives. Others, however, believe that Disney with its arsenal of franchises, from “Star Wars” to “The Avengers,” represents the future of the movie business and is thus a more exciting enterprise. In either scenario, there will be deep staffing cuts.

If Comcast scores Fox’s film assets, Universal will probably integrate the studio into its existing operations, though questions remains about potential redundancies between specialty divisions Fox Searchlight and Universal’s Focus Features. If Disney prevails, the studio may use more of a label strategy, producing films under different banners that then get released over its planned standalone streaming service. The Marvel characters that Fox licenses, such as the X-Men and the Fantastic Four, will be overseen by Kevin Feige, the head of Marvel’s film operations.

Iger has been quietly meeting with key staffers since Disney’s bid for Fox was announced last December. The sitdowns have been described as more “get to know you” in nature, with no formal offers being extended. However, Disney has been mapping out some scenarios about what to do with top staff. Studio chief Stacey Snider is not expected to make the move to Disney. Iger is happy with current studio chief Alan Horn, so there’s not a natural landing spot for Snider. She is currently weighing her options, which might include starting her own production label or advising a Silicon Valley player such as Apple or Facebook on their content ambitions.

Disney does want to retain Elizabeth Gabler, the Fox 2000 president with a knack for turning literary properties such as “The Fault in Our Stars” and “Life of Pi” into box office hits. One possibility being toyed with would have Gabler and Rice reinvigorate Disney’s moribund adult Touchstone label. There is also a thought that Emma Watts, Fox’s production president and the studio’s vice-chairman, might be a good fit helping to oversee Disney’s live-action remakes of animated classics. And Iger is a fan of Fox Searchlight heads Nancy Utley and Steve Gilula, though Disney isn’t sure it wants the indie fare they produce to continue being distributed under the Searchlight label. Despite the corporate uncertainty and yet-to-be resolved bidding war between Comcast and Disney, Fox’s film team has been busy greenlighting a number of high-profile projects, including the animated movie “Foster,” James Mangold’s “Ford v. Ferrari,” and a $100 million production of “Call of the Wild,” an adaptation of the Jack London novel.

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