July 2018


Comcast Bids 20% More Than Disney For Fox

Comcast is keen to acquire Rupert Murdoch's 21st Century Fox, which seems to prefer to sell to Disney.

A day after US Courts approved AT&T's vertical merger deal to acquire Time Warner, Comcast formally submitted its offer that addressed all past objections and concerns that Fox had expressed against Comcast's earlier offer.


On 13 June 2018, Comcast offered to buy Fox for $ 65 billion paid in cash, which is 19% more than Disney's $ 55 billion offer. It must be noted that Disney's offer is a share swap, and not Cash-On- The-Table bid by Comcast.


The Murdoch's had turned down Comcast's earlier bid, saying that it was unlikely to be accepted by US regulators. Comcast has offered to pay a massive $4.025 billion breakup fee should regulators reject their bid. About $2.5 billion of this is a commitment to pay Disney's breakup fee.

Incidentally, 3 years ago, the FCC had rejected Comcast's bid for Time Warner. However, the Time Warner merger would have been a horizontal merger, between 2 very large MSOs. The Fox buy out will be a vertical merger for Comcast, similar to AT&T's recent buyout of Time Warner.


SCaT magazine has been speculating that Rupert Murdoch wants to sell only to Disney, so that soon thereafter, his son James will assume the CEO position at Disney, effectively controlling both Disney and 21st Century Fox.

Comcast's higher bid is a huge unexpected headache in the plan.

Comcast also submitted that it had already tendered its antitrust filing with the Justice Department & expected the review to flow congruently with that of Disney.

Comcast said it expects to close the deal 12 months after Fox signs on to it.

Comcast has agreed to the same divestiture package as Disney. It has also agreed to the same allocation of any tax obligations & behavioral restrictions as those agreed to by Disney.


Fox has called for a shareholder's meeting on 10th July to examine and approve the Disney bid.

Comcast has now made its counter bid well before that deadline & has demanded that its bid also be examined as an alternate to Disney's bid.

In a letter to Fox's controlling family members, executive chairmen Rupert and Lachlan Murdoch, and CEO James Murdoch, Comcast CEO Brian Roberts said "In light of yesterday's decision in the AT&T/Time Warner case, the limited time prior to your shareholders' meeting, and our strong continued interest, we are pleased to present a new, all-cash proposal that fully addresses the board's stated concerns with our prior proposal."

Roberts said Comcast's board of directors had unanimously approved the offer, meaning the deal does not need shareholders' approval.


Steve Burke, CEO of Comcast's NBCUniversal unit, said Fox's ability to tap foreign markets like Europe, India and Latin America with local language content was crucial in an era of increasing Netflix global domination.

Burke noted that Fox currently gets 70% of its revenue from overseas. An acquisition of Fox would increase Comcast's international share from 9% to 27%.

"We firmly believe that NBCUniversal would be the ideal home for the Fox assets," Burke said.


After Comcast announced its $65 billion bid, Fox reluctantly agreed to review the new offer.

"21st Century Fox remains subject to the Disney Merger Agreement. Consistent with the terms of this agreement and the fiduciary duties of the company's directors, 21st Century Fox's board, in consultation with its outside legal counsel and financial advisors, will carefully review and consider the Comcast proposal," Fox said in a statement. "21st Century Fox has not yet made a determination, in light of Comcast's proposal, as to whether it will postpone or adjourn the July 10, 2018 special meeting of stockholders to consider certain proposals related to the Disney Merger Agreement."


Under the terms of its merger agreement with Fox, Disney has the right of refusal on any counteroffer. While it will have five days to make a fresh bid, the clock does not start ticking until after the Fox board has assessed the Comcast offer and deemed it superior to Disney's.


Also, up for sale is Fox's 39% share in U.K. DTH platform Sky.

Comcast is locked in a bidding war with Fox to buy the other 61% of Sky. If Comcast buys Fox and successfully bids for Sky DTH, it will fully own the world's most profitable DTH platform.


In June 2018, U.K. regulators have accepted Comcast's $29 billion bid to buy DTH platform Sky, without any conditions.

Fox's plan to buy the 61% of Sky DTH (for $ 24.7 billion) it does not already own, was approved only if Fox sold Sky News. Fox said it has already submitted a proposal for sale of Sky News to Disney.


Some observers feel that other players could also make offers for 21st Century Fox.

Fox's very profitable Star India, & other international assets make it very attractive to US companies who have little presence outside the USA.

A number of tech firms have deep pockets that could enable them to easily top Comcast's bid. Apple has some $267 billion in cash and equivalents, and Google has around $103 billion. n


On 20 June, Disney raised its offer for 21st Century Fox to $71.3 billion, outbidding Comcast Corp. by $ 3 per share. Fox accepted the offer.

A counter bid by Comcast was not made till the time we went to press.

Further, on 27 June, the US dept of Justice (DoJ) approved Disney's revised bid. The bid still requires approval from non-US agencies.