Comcast challenges Disney with $65B bid for Fox

  • Comcast challenges Disney with $65B bid for Fox

Comcast challenges Disney with $65B bid for Fox

For example, Comcast is reportedly eager to gobble up some of 21st Century Fox's assets. As reported by CNBC, the global telecommunications conglomerate was willing to offer $60B in cash for the Rupert Murdoch-founded company.

In recent weeks, Philadelphia-based Comcast confirmed its desire to outbid Disney in advance of shareholder votes set for July 10. Comcast has also agreed to pay a $2.5 billion reverse breakup fee in case the acquisition actually does get squashed by the government. A loss for AT&T and Time Warner could have signaled a new era of government scrutiny over so-called "vertical mergers" and could have halted attempts by companies like Disney, Fox and Comcast to announce their own megadeals.

The U.S. cable giant made an all-cash offer of $65 billion to acquire much of Fox's film and television assets, its worldwide holdings and its stake in the streaming service, Hulu. It's unclear at the present time if Fox will stick with the Disney deal or start a potential bidding war. Disney's $52 billion offer is in stock, but Comcast will now officially offer Fox $60 billion in cash.

Hulu is now jointly controlled by Disney, Fox, and Comcast which each own a 30 percent share.

The approval on Tuesday, which both the Department of Justice and President Donald Trump had voiced opposition to, is likely to fuel more mergers in the space, Wall Street believes. Comcast's official counterbid now pressures Disney to come up with a higher offer for Fox - lest it have compelling entertainment assets slip through its hands at a time when technology giants are storming Hollywood, forcing traditional media companies to bulk up. Plus, he called out franchises like Deadpool, Avatar, X-Men, Simpsons and Family Guy, as well as cable networks such as FX and National Geographic, which would give the company an enviably deep bench.

"The conventional wisdom is that the government had a steep hill to climb bringing the first vertical-merger case", in over 40 years, Eric Mahr, a former director of litigation at the Department of Justice, told Business Insider. As such, Comcast has improved an offer it discussed with Fox a year ago by saying it's offering $2.5 billion in case the deal doesn't go through and would reimburse Fox for another $1.5 billion it will owe Disney for breaking their arrangement.

AT&T and Time Warner together are some of the largest buyers of advertising around the globe, spending billions of dollars to market their products.

The government anxious that AT&T, as DirecTV's owner, could charge Comcast and other rival distributors higher prices for Time Warner channels like CNN or HBO. Comcast bid for Sky in April, after Fox's bid for the remainder of European pay-TV group it did not already own was delayed by regulators. Disney also offered break-up fees, should the deal fail to win regulatory approval.

But a court ruling this week on a similar merger may have alleviated those worries. The Trump Justice Department had sued to block the $85 billion merger, arguing that it would hurt competition in cable and satellite TV and jack up costs to consumers for streaming TV and movies.

"Compare today to the 50s or 60s when we had three television stations and you had one AT&T that was, then, protected by government monopoly", Crews said.