Comcast prepares all-cash offer to get in on Disney-Fox deal
The US cable operator has asked banks to up financing to as much as $60 billion
US cable operator Comcast is asking investment banks to increase a bridge financing facility by as much as $60 billion (Dh220bn) so it can make an all-cash offer for the media assets that Twenty-First Century Fox has agreed to sell to Walt Disney Co for $52bn, three people familiar with the matter said on Monday.
Comcast chief executive Brian Roberts only plans to proceed with the bid if a federal judge allows AT&T’s planned $85bn acquisition of Time Warner to proceed, the sources said. The US Department of Justice has opposed the AT&T-Time Warner deal over antitrust concerns, and a decision from US District Court Judge Richard Leon is expected in June.
Disney chief executive Bob Iger clinched an all-stock deal with Fox executive chairman Rupert Murdoch 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.
Comcast, owner of NBC and Universal Pictures, has also made a 22bn pound (Dh109bn) offer to acquire the 61 per cent stake in European pay-TV group Sky that Fox does not already own. In doing so, it topped an earlier offer for the entirety of Sky by Fox.
Last November, Comcast offered to acquire most of Fox’s assets in an all-stock deal valued at $34.41 per share, or $64bn, 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 exact value of Comcast’s new bid for the Fox assets is not yet clear, although the $60bn in new financing indicates it is seeking significant firepower to outbid Disney. Comcast already has a $30bn bridge loan to finance its Sky offer.
The sources asked not to be identified because the matter is confidential. Comcast, Fox and Disney declined to comment.
Fox shares rose 5.13 per cent to $39.99 on the news in after-hours trading in New York on Monday. Comcast shares were down 1.5 per cent to $31.90, while Disney shares were down 0.5 per cent to $102.00.
Murdoch, who owns close to a 17 per cent in Fox and also has voting control, prefers to be paid in stock rather than cash for the Fox assets, because this makes the transaction non-taxable for shareholders, sources have said. It is not clear how receptive he would be to an all-cash offer.
Last month’s regulatory filing also showed that Fox viewed 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 $149bn.
Disney has committed to share buybacks as a way of returning 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.
Updated: May 8, 2018 06:41 AM