Disney Sweetens Offer for Fox to $71 Billion, Outbidding Comcast




 

Walt Disney Co. raised its offer for 21st Century Fox Inc.'s entertainment assets to $71.3 billion, outbidding Comcast Corp. in a battle for one of the media industry's biggest prizes.

The $38-a-share price is about $10 a share higher than what Disney proposed in December -- and $3 above Comcast's bid from last week. Fox has accepted the offer, saying it provides more flexibility and other enhancements than the $65 billion Comcast deal. Still, the opportunity remains for the cable giant to return with sweetened terms.

At stake is a trove of media properties, ranging from "The Simpsons" to "X-Men," that may help fend off the threat from Netflix Inc. and other streaming upstarts. Both Disney and Comcast are looking to use the Fox assets to bolster their content and expand overseas.

Disney's latest offer is a "very aggressive move" by Chief Executive Officer Bob Iger and may make it difficult for Comcast to respond, said Bloomberg Intelligence analyst Paul Sweeney. Comcast's current bid was already poised to load the company up with debt, and its shares have fallen 18 percent this year.

"Comcast's balance sheet may preclude it from bidding much higher," Sweeney said. "Further hampering Comcast's ability to respond is its position that it does not want to use its stock in a deal at these low levels."

Fox shares jumped as much as 6.8 percent on Wednesday, sending them to a record high. Disney rose about 0.6 percent as of 9:56 a.m. in New York, while shares of Comcast were little changed.

AT&T Effect

The tussle follows AT&T Inc.'s victory over the U.S. Justice Department in its antitrust battle to take over Time Warner Inc. That outcome is expected to spur a wave of media consolidation, emboldening companies to get more aggressive with deals.

Why AT&T-Time Warner Win Opens the Dealmaking Gates: QuickTake

The Disney-Comcast contest will determine who controls much of Rupert Murdoch's empire, including Fox's movie and TV studios, television networks such as FX, and multichannel providers like Star India and Sky Plc.

But the two sides aren't vying for all of Fox. Part of the business will be used to create an entity called "New Fox," which will include the highly lucrative Fox News, the sports channels FS1 and FS2, and the Fox broadcasting channel. That operation will be run by Lachlan Murdoch and focus on domestic television, news and sports.

Cash Option

Disney's new offer gives Fox shareholders the option to take their payment in the form of cash or stock, up to a 50-50 level. The previous agreement was an all-stock deal, and Comcast's cash offer was seen as a significant enticement.

Disney also plans to take on about $13.8 billion of Fox's net debt. That would lift the total transaction value above about $85 billion.

Fox had planned to hold a July 10 meeting for shareholders to vote on the previous Disney offer, which was hammered out in December. It said on Wednesday that the gathering will be delayed to give investors "the opportunity to evaluate the terms of Disney's revised proposal and other developments to date." That could give Comcast more time to come back with a fresh bid.

Meanwhile, there's a separate -- yet intertwined -- fight for Sky, the British pay-TV company. Fox has attempted to acquire the portion of Sky that it doesn't already own, but Comcast swooped in with a higher bid.

Sky High

Sky shares climbed as much as 3.5 percent, a sign investors expect the Disney deal to help deliver them a higher price.

If Comcast gets stymied in its bid for Fox, there's a greater chance it will pay more to hold onto Sky, said Claire Enders, founder of media research firm Enders Analysis.

"I think the market is expecting another move from Comcast" for Sky, Enders said.

In any case, Comcast isn't likely to go away quietly.

Comcast's current $65 billion cash offer for Fox -- along with the potential Sky deal -- was already expected to push its debt load to $170 billion, according to Moody's Investors Service. That leaves CEO Brian Roberts with some tough decisions.

"The ball is now in Brian Roberts's court," Sweeney said.

Read Disney Sweetens Offer for Fox to $71 Billion, Outbidding Comcast on bloomberg.com

COMMENTS

More Related News

Why Did Disney (DIS) & Netflix (NFLX) Stock Jump Monday?
Why Did Disney (DIS) & Netflix (NFLX) Stock Jump Monday?

Shares of Disney DIS and Netflix NFLX surged Monday for completely different reasons. Disney saw its stock price jump nearly 2% Monday after Comcast CMCSA officially outbid 21st Century Fox FOXA to take control of European pay-TV titian Sky SKYAY PLC. Comcast offered $22.59 a share-valued at $38.8 billion-which marked over a 40% premium to the cable and internet power's February offer. Comcast saw its stock price plummet Monday following the weekend auction conducted by UK regulators.

Comcast Could Enter the $100 Billion Debt Club With Its Sky Bid
Comcast Could Enter the $100 Billion Debt Club With Its Sky Bid

Comcast Corp.'s winning bid for Sky Plc is poised to catapult the U.S. cable giant's debt load to $100 billion or more, putting it in a club that only a handful of other companies belong to. It's not clear how much of Sky will end up in Comcast's hands. "If Comcast gets 100 percent, it certainly puts a lot of stress on its balance sheet," Sarma said.

Alisyn Camerota Says She Endured More Than Sexual Harassment At Fox News
Alisyn Camerota Says She Endured More Than Sexual Harassment At Fox News

CNN news anchor Alisyn Camerota says that when she was working at Fox News she

Amid furor, Trump pushes pause on deciding Rosenstein
Amid furor, Trump pushes pause on deciding Rosenstein's fate

As Air Force One streaked across the desert sky and Las Vegas faded in the distance, President Donald Trump began seeking opinions. The TVs on the plane, tuned as always to Fox News, carried headlines about an explosive new story: Deputy Attorney General Rod Rosenstein had suggested wearing a wire to

Comcast outbids Fox with $39 billion offer for Sky in auction
Comcast outbids Fox with $39 billion offer for Sky in auction

Comcast beat Rupert Murdoch's Twenty-First Century Fox in the battle for Sky after offering around 30 billion pounds ($39 billion) for the British broadcaster in a rare auction to decide the fate of the pay-television group. U.S. cable giant Comcast bid 17.28 pounds a share for control of London-listed

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.