Categories Earnings, Technology

Will Comcast win the bidding battle against Disney and grab Fox’s assets?

Comcast (CMCSA) is engaging in a bidding war with Walt Disney (DIS) by proposing a higher, all-cash superior offer for most of Twenty-First Century Fox’s (FOXA) media assets. Already, Disney has agreed to a $52-billion all-stock deal with Fox. This kind of battle is not new for Comcast, which already had fought with Fox for acquiring Sky Plc assets.

With this counter-offer coming in place, Fox and its shareholders are feeling the pressure of deciding which offer is better for them. This also indirectly compels Fox and their shareholders not to hurry in accepting the Disney deal. Later this summer, a voting will be held among Fox shareholders with regard to the Disney deal.

This is the first formal confirmation from Comcast after media speculated earlier this month that the company was planning for a cash offer of as much as $60 billion. But at that time, Fox’s executive chairman Lachlan Murdoch said Fox shall oblige to the Disney’s deal.

When Disney approached with the proposal a month before, Comcast had offered a higher price of $64 billion for all of Fox’s assets.

For Fox’s largest shareholder Rupert Murdoch, who owns a 17% ownership in Fox, the Disney deal might be a favorable one compared to the all-cash offer from Comcast. This is because the Comcast offer might attract multi-billion dollar capital gains tax bill to Murdoch, according to a Reuters report which cited the tax experts.

When Disney approached with the proposal a month before, Comcast had offered a higher price of $64 billion for all of Fox’s assets. But regulatory concerns turned down Rupert Murdoch’s view in agreeing to Disney’s offer. Meanwhile, EU authorities are reviewing the Comcast’s $31-billion bid for a 61% stake in European pay-TV group Sky Plc, which Fox does not own.

Earlier this year, Comcast has put forth an offer for Sky Plc but confirmed it only at the end of April. The Comcast offer for Sky plc exceeded Fox’s offer by around $4.2 billion in value. Fox, which holds a 39% stake in Sky, is facing regulatory concerns in the UK as authorities believe Murdoch family might have more power over the British media. But Comcast is expected to face less regulatory roadblocks in the UK.

For now, the Fox media assets bid planned by Comcast will only go forward if the AT&T (T) and Time Warner (TWX) deal succeed. It is anticipated that next month a federal judge will give approval for the AT&T’s planned $85-billion buyout of Time Warner.

If the Comcast-Fox deal goes through, Comcast is intending to face media and entertainment giants with the massive $100 billion worth of Sky and Fox assets in its treasures. After the sale, Fox’s leftover assets will consist of Fox Business Network, sports cable networks, and Fox News.

The decision of Fox shareholders remains the key highlight in the bidding war as certain investors opted for a higher Comcast all-cash bid than Disney’s all-stock one. And if shareholders opt for Comcast offer then Murdoch would face a mammoth capital gains tax, and Marvel fans will also share the disappointment of never seeing Avengers joining hands with Marvel comic-book superhero groups X-Men and Fantastic Four.

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