Now that the much-hyped AT&T-Time Warner acquisition has been completed, all eyes are on the next candidates – Comcast (CMCSA), Walt Disney (DIS) and 21st Century Fox (FOX). It was expected that once the AT&T-Time Warner deal got its approval, the fight for Fox would get more interesting. And it definitely has.
Comcast has submitted a $65-billion bid for Fox, topping Disney’s $52-billion one, and the latter has five days to come up with a better offer. Fox’s assets are a treasure trove, and both Disney and Comcast want it badly. The winner gets Hulu – a worthy rival to Netflix. Alongside this, for both companies, a combination of their assets with that of Fox would give each of them immense strength and the lion’s share of the media and entertainment market.
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This is one of the reasons some experts believe Disney is most likely to increase its offer. Disney could always put together some more cash and give Fox a better proposal and Fox might also have a soft spot for Disney’s stock offer due to tax concerns. Disney has the flexibility to go higher on this bid, and it might prefer to do just that than let this lucrative set of assets slip away from its hands. Add to this the fact that Disney has had its eyes on this deal for several months now and it might be hard to let it all go to waste.
If the Fox assets get split up, the one who would benefit the most would be Netflix
There is also the likelihood of Comcast putting in some stock to ease the tax mentioned above concerns. Considering the massive assets involved and their value, along with the anti-trust issues they might raise, there is a remote chance the Fox assets could be split between Disney and Comcast or more parties could get involved. This might be thinking too far but it is an interesting scenario, and no one knows how it could turn out.
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If the assets do get split up, the one who would benefit the most would be Netflix. If either Disney or Comcast receives Fox completely, they will gain massively in the streaming service space with Hulu. The threat to Netflix is more from Disney because the latter owns a significant amount of popular content.
As much as this merger is expected to go through smoothly now that AT&T and Time Warner have made it through, one aspect that seems to be getting overshadowed is the fact that this is a horizontal merger that has every possibility of hitting a roadblock unlike the vertical merger of AT&T-Time Warner. The chances of reduced competition due to this deal will definitely put it under intense scrutiny.
Disney’s stock has gained more than 4% over this past week. Comcast has climbed more than 5% while Fox has gained around 12% over this five-day period.