Comcast Eyes Rekindling Fox Bid -- WSJ
February 12 2018 - 2:02AM
Dow Jones News
By Amol Sharma and Shalini Ramachandran
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 12, 2018).
Cable giant Comcast Corp. is contemplating reviving its pursuit
of 21st Century Fox, after its bid for the company's entertainment
assets was turned down despite being over 15% higher than that of
eventual buyer Walt Disney Co., according to people familiar with
the situation.
Disney struck a deal with Fox in December, agreeing to pay $52.4
billion in stock. Fox turned down a Comcast offer that was in the
low-$60 billions range, the people said. The assets on the table in
both offers were essentially the same, including the Twentieth
Century Fox movie and TV studio, international pay TV properties
and some U.S. cable networks.
Fox's primary concern about the Comcast bid was that a tie-up
between the companies would face significant antitrust risks,
people familiar with the discussions said.
A Comcast acquisition of Fox would be a "vertical" deal adding
more cable TV channels to a company that also is a powerhouse in
channel-distribution. The government signaled concerns about
vertical deals when it sued to block AT&T Inc.'s acquisition of
Time Warner Inc., a case that heads to trial next month. Some Wall
Street analysts noted the potential roadblocks in Washington to a
Comcast-Fox deal.
Comcast believed it had offered substantial protections in its
offer against antitrust risk, some of the people familiar with the
situation said.
Fox executives positioned the Disney deal as a chance for its
investors to benefit from Disney's vast content machine and plans
to battle the likes of Netflix Inc. with direct-to-consumer
streaming services. After an asset sale, the remaining "new Fox"
would have properties including the Fox broadcast network, Fox News
and Fox Sports 1.
21st Century Fox Chief Executive James Murdoch, son of Executive
Chairman Rupert Murdoch, may get a position at Disney if the deal
is completed. It is also possible the younger Mr. Murdoch could
strike out on his own.
The Murdoch family controls a 39% voting interest in both 21st
Century Fox and Wall Street Journal-parent News Corp.
A Disney spokeswoman didn't immediately respond to a request for
comment.
Comcast may choose to take no further action. One key
development that could influence its thinking is Fox's release of a
proxy statement on the merger, which would likely indicate the
general process that led up to sealing a deal. It is unclear when
Fox will file its proxy with regulators, ahead of a shareholder
vote on the deal.
Though such documents don't generally use specific company
names, they can reveal how many bidders were serious contenders.
Comcast will be looking for whether the proxy is clear that its bid
was far higher than Disney's, and for signs that it was considered
seriously, some of the people familiar with the situation said.
Another key factor is the AT&T-Time Warner case, as earlier
reported by CNBC. If the deal survives the government's challenge,
Comcast would be emboldened because it would believe Fox's argument
of antitrust risk in a Comcast-Fox deal would be weakened, those
people said.
Comcast might be prepared to offer protections to Fox such as
agreeing to remove certain assets from the deal that prove
controversial in Washington, including regional sports channels,
one of the people familiar with the situation said. It is also
possible that instead of re-engaging in pursuit of all of the Fox
assets, Comcast could zero in on something in particular, such as
European pay TV giant Sky, some of the people said. Fox's attempt
to purchase the remaining 61% of Sky it doesn't own has run into
turbulence in the U.K.
Comcast, like Disney, believes Fox's assets could help it bulk
up in content production, get more exposure to growing
international assets like Fox's Star India, and allow it to
increase its stake in online video service Hulu, which is co-owned
by Comcast, Disney and Fox. Consolidation in the cable and media
industries has pressured companies to explore big transactions.
There are a range of factors that can influence a company's
decision to turn down a higher purchase offer. In stock deals, the
future value of the buyer's stock is an issue, as is the control
powerful constituents would have.
Comcast has a dual-class share structure that gives Chief
Executive Brian Roberts one-third of the shares' combined voting
power, while Disney has only one class of shares. The Murdoch
family would be influential shareholders at Disney.
Write to Amol Sharma at amol.sharma@wsj.com and Shalini
Ramachandran at shalini.ramachandran@wsj.com
(END) Dow Jones Newswires
February 12, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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