Business & Financial

Exclusive: Comcast prepares all-cash bid to gate-crash Disney-Fox deal – sources

FILE PHOTO: The NBC and Comcast logos are displayed on 30 Rockefeller Plaza in midtown Manhattan in New York

FILE PHOTO: The NBC and Comcast logos are displayed on 30 Rockefeller Plaza in midtown Manhattan in New York, U.S., February 27, 2018. REUTERS/Lucas Jackson/File Photo

By Greg Roumeliotis and Liana B. Baker

(Reuters) – U.S. cable operator Comcast Corp is speaking to investment banks about obtaining bridge financing for an all-cash bid to displace Walt Disney Co on its $52 billion deal to acquire most of Twenty-First Century Fox Inc’s assets, three people familiar with the matter said on Monday.

The move is the first concrete step that Comcast is taking to upend Disney’s deal with Fox. It sets Comcast Chief Executive Brian Roberts on a collision course with two other media industry titans, Fox CEO Rupert Murdoch and Disney CEO Bob Iger.

Comcast, owner of NBC and Universal Pictures, has already made a 22 billion pound ($30 billion) offer to acquire the 61 percent stake in European pay-TV group Sky Plc that Fox does not already own. In doing so, it topped an earlier offer for the entirety of Sky by Fox.

Comcast is asking investment banks to increase the bridge financing facility they have already arranged for the Sky offer by as much as $60 billion to finance the Fox bid, the sources said.

Comcast is waiting for a judge to rule next month on the U.S. Department of Justice’s challenge to telecommunications provider AT&T Inc’s planned $85 billion acquisition of media conglomerate Time Warner Inc before it submits an offer to Fox, the sources said.

Fox rejected an offer from Comcast last year largely due to antitrust concerns, and Comcast plans to make a new offer only if AT&T and Time Warner prevail in court, the sources added.

The sources asked not to be identified because the matter is confidential. Comcast, Fox and Disney did not immediately respond to requests for comment.

Fox shares rose 5.13 percent to $39.99 on the news in after-hours trading in New York on Monday.

Disney clinched an all-stock deal in December to acquire Fox’s film, television and international businesses, giving the world’s largest entertainment company an arsenal of shows and movies to combat growing digital rivals Netflix Inc and Amazon.com Inc.

Murdoch, who owns close to a 17 percent in Fox and also has voting control, had a preference at the time for a stock deal, because it made the transaction non-taxable at a Fox shareholder level. It is not clear how receptive he would be to an all-cash offer by Comcast.

Disney has committed to share buybacks to give some cash to Fox shareholders. As a result, Comcast sees an opening in being disruptive to the deal by making an all-cash bid, according to the sources.

Last November, Comcast offered to acquire most of Fox’s assets in an all-stock deal valued at $34.41 per share, a regulatory filing showed last month. Like Disney, Comcast sought to buy Fox’s entertainment networks, movie studios, television production and international assets, the filing shows.

Fox ended up announcing an all-stock deal with Disney for $29.54 per share. In the regulatory filing, Disney and Fox cited regulatory hurdles as reasons to reject Comcast’s bid, even though they did not reference it by name.

The filing also shows that Fox saw Disney’s stock as more valuable than Comcast’s, based on historic prices, and felt that a deal between Disney and Fox would generate greater long-term value. The Roberts family controls Comcast through a dual-class stock structure.

Comcast’s stock has dropped since then, from around $38 to about $32 now, giving the company a market capitalization of $149 billion.

The NBC and Comcast logo are displayed on top of 30 Rockefeller Plaza, formerly known as the GE building, in midtown Manhattan in New York

(Reporting by Greg Roumeliotis and Liana B. Baker in New York; Additional reporting by Jessica Toonkel in New York; Editing by Lisa Shumaker)

 

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