Published: Fri, June 15, 2018
Money | By Wilma Wheeler

Comcast offers $65 billion cash bid for 21st Century Fox

Comcast offers $65 billion cash bid for 21st Century Fox

"Comcast executives had awaited the decision in that case" NYT reports, "before mounting their bid for 21st Century Fox". (FOXA.O), topping a previous proposal by Walt Disney Co. This could result in a massive bidding war that will shape the industry for years to come.

In a letter to Fox executives (namely Rupert, James and Lachlan Murdoch), Comcast CEO Brian Roberts wrote that after meetings a year ago, his team was convinced that Comcast would be "the right strategic home" for the Fox assets, and that "we were disappointed when 21CF made a decision to enter into a transaction with The Walt Disney Company, even though we had offered a meaningfully higher price". "Barring a third entrant (Internet/tech is possible), we would see the most sensible outcome as splitting the baby, with Comcast getting Sky (which we see as its main goal) and Disney getting most of the rest".

The deal is set to unite AT&T's significant wireless, satellite television and internet business with Time Warner's media properties, which include HBO and CNN.

Comcast offered $35 per Fox share for the media assets, compared with Disney's stock offer, worth $29.18 per share at the close of trade on Wednesday.

The move follows a previous bid being rebuffed past year.

Shares of AT&T spiked immediately after the announcement and are now down about 2% in after-hours trading.

The deal became possible when Rupert Murdoch, 87, and his sons chose to slim down the media empire, leaving them with a "New Fox" that includes the Fox News Channel, the Fox broadcast network and sports cable operations. So not only is Comcast's bid 19 percent higher, but it's in cold, hard cash, which is surely appealing to Fox. Disney made a US$52.4 billion all-stock offer for Fox, which was accepted in December. Comcast is backing a dump truck of cash up to 21st Century Fox's doorstep, besting Disney's previous offer to buy the company. "Consistent with the terms of this agreement and the fiduciary duties of the Company's directors, Twenty-First Century Fox's Board, in consultation with its outside legal counsel and financial advisors, will carefully review and consider the Comcast proposal". "There are a number of deals in the pipeline that will now proceed with renewed vigor", said Fiona Schaeffer, an antitrust attorney at law firm Milbank Tweed Hadley & McCloy.

Comcast already owns film and TV studios, broadcast and cable TV operations including the NBC and US networks, and the Universal Studios theme parks.

Comcast may face more difficulty than AT&T and other would-be acquirers, though, since Comcast already has its own TV and movie studios in the NBC Universal division, a content overlap AT&T-Time Warner lacked. Now the judge overseeing the case has ruled that AT&T can merge with Time Warner.

"We are highly confident in our ability to finance the transaction, and our offer includes no financing-related conditions", Roberts said. The bid tops the $52.4 billion offer made by Disney previous year.

For example, when Comcast acquired NBCUniversal in 2011, the DoJ mandated that Comcast would have to submit to third-party arbitrators over any pricing disputes with other channels, and said that Comcast couldn't have any control over streaming service Hulu (which Comcast owns a stake in).

Beyond the impact on the two companies, the merger is expected to spur frantic dealmaking in the rapidly consolidating media sector.

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