Giant cable operator Comcast has made a $65 billion offer to acquire 21st Century Fox and all its assets. The offer was made on Wednesday and it may undercut Disney which had already offered $52 billion for the same entertainment assets. Comcast also owns NBCUniversal, NBC News parent company.
The $65 billion deal is looking to acquire Fox’s movie and TV production assets as well as other global TV channels such as Star India and Sky Europe. As part of the bid, Comcast is also offering a break fee of $2.5 billion. The fee will be triggered if the bid is blocked by the US government. Disney offered the same break fee on its $52 billion offer.
The timing of this new bid is quite interesting since it comes barely days after a federal judge in Washington terminated a lawsuit by the US Justice Department attempting to block the merger of AT&T and Time Warner. The CEO of NBCUniversal Steve Burke said that the media landscape had really changed over the last few years. Burke added that more and more people are consuming entertainment through various platforms. Comcast feels that acquiring 21st Century Fox assets will help it scale its business and expand its current portfolio.
Comcast had secured agreements with some major banks for financing in order to undercut the Disney offer with a bigger bid. However, the deal still needs to be approved by federal regulators. The Justice Department hasn’t released any comment on the Comcast bid, and we aren’t sure how Disney will react to this latest development.
Nonetheless, US District Court’s decision to approve the AT&T and Time Warner deal may provide the ideal legal precedence that could clear the regulatory hurdle for Comcast and Disney in their efforts to acquire Fox’s assets. A lot of analysts are confident that Disney will counter the bid by Comcast.
Acquiring Fox and all its assets is very important for Disney. The company is looking to create an online streaming service to rival Netflix which has grown massively over the last few years. Fox’s TV and film assets will be crucial in attracting new subscribers to the platform. It’s also very likely that Disney may decide to negotiate a split of Fox’s assets with Comcast in order to avoid a costly bidding war.
But the company that will manage to win will definitely have a massive edge in the online streaming landscape. For instance, 21st Century Fox owns 30% of Hulu, the third largest company in the online streaming industry. The remaining 60% is owned by both Comcast and Disney. A deal to acquire Fox and its stake in Hulu could give Comcast or Disney a controlling interest in Hulu if they win the bidding war. The Fox board will meet on June 20th to consider the Comcast offer. A shareholder meeting is scheduled for July 10th to discuss the matter further.