Comcast Is Prepping 'Superior' All-Cash Offer for Fox Assets

Gladys Abbott
May 25, 2018

Whilst Disney has accepted the Fox deal in principle, this may yet put a spanner in the proverbial works. Comcast was talking to investment banks about obtaining bridge financing for the all-cash deal, the person said at the time.

Further complicating things here is the fact that Comcast is now in a bidding war for Sky.

The Philadelphia company could bid $60 billion for the Fox movie studio, Fox regional sports networks, global businesses, and other Fox assets, and according to published reports has been arranging financing for the all-cash deal.

"Comcast - if they pursue this - are throwing their balance sheet and credit rating to the wind", Moody's Investors Service analyst Neil Begley warned on Wednesday. Fox shares gained 1.6% to $37.88 on moderately increased trading volume. Fox would hence be looking for the offer's value, whether it is cash or stock (with cash having more immediate value) and whether the suitor will understand Fox and be able to manage the mega deal's inevitable people and structure issues. And this wouldn't be the first time that Comcast and Disney have faced off. Comcast made an initial bid in December but bowed out due to antitrust concerns.

After a sale, Fox's remaining assets will include Fox News, Fox Business Network and sports cable networks. Disney owns ESPN sports-media juggernaut, movie studios, a huge film library, and the ABC broadcast-TV network. Comcast said at the time that it "never got the level of engagement needed to make a definitive offer". Moreover, as cord cutting grows in the U.S., and consumer media consumption habits change, the market will continue to see more big deals that strive to insulate players from industry disruption. Disney already plans to buy Sky TV as part of the deal for Fox, but United Kingdom regulators have said they don't see any public interest concerns with Comcast's offer.

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"When a set of assets like 21st Century Fox's becomes available, it's our responsibility to evaluate if there's a strategic fit that could benefit our company and our shareholders", Comcast said in December, after bowing out of its interest in Fox.

There's also the small matter of needing Fox shareholders' approval for any deal to go through.

Comcast has separately made a firm offer for the Sky satellite-TV business for $31 billion, taking the total potential deals in Comcast's pipeline to about $90 billion, all in cash. The Wall Street Journal and others reported earlier that Comcast had lined up $60 billion in cash to challenge Disney for media mogul Rupert Murdoch's company.

"Comcast Corporation confirms that it is considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney", the company said.

Either deal would dramatically reshape the media-entertainment landscape and scale back the Fox empire created by the 87-year-old Murdoch. Offering stock isn't an option for Comcast, though, as its shares have dropped 16% in 2018 to date.

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