Comcast Prepares Bid for Fox Assets, Thwarting Disney

Comcast Prepares Bid for Fox Assets, Thwarting Disney

Comcast Prepares Bid for Fox Assets, Thwarting Disney

Comcast Corp. is lining up financing for a potential bid for 21st Century Fox Inc.’s entertainment assets, countering a previously accepted offer from Walt Disney Co., said a person with knowledge of the situation.

Comcast is talking to investment banks about obtaining bridge financing for an all-cash bid, said the person, who asked not to be identified because the deliberations are private. The move, previously reported by Reuters, threatens Disney’s $52 billion deal to purchase Fox’s film and TV assets.

The prospect of a bidding war sent Fox shares up as much as 5.1 percent in late trading on Monday. It also further complicates a global game of M&A chess among media giants. Comcast has already made a 22 billion pound ($30 billion) offer to acquire the 61 percent stake in European pay-TV group Sky Plc that Fox doesn’t already own. Fox and Disney also are interested in buying the business.

Comcast is asking investment banks to increase the bridge financing line they have already arranged for the Sky offer by as much as $60 billion to finance the Fox bid, according to the person. Comcast previously offered Fox at least 16 percent more for a chunk of its assets than Disney, though regulatory concerns ultimately led controlling stockholder Rupert Murdoch to accept the lower bid.

A Comcast representative declined to comment. The company filed for European Union approval for its bid for Sky, the EU said in an email on Monday. Comcast on Tuesday made binding promises to continue to finance Sky News and keep the service based in Britain as part of its effort to secure U.K. approval for the deal.

Fox shares climbed as high as $39.99 in extended trading. They had been up 10 percent this year through Monday’s close.

AT&T Effect

Comcast, the nation’s largest cable company, is still considering whether to bid for Fox, according to the person. The decision may be influenced by the outcome of a separate deal by AT&T Inc. to acquire Time Warner Inc.

Comcast may decide not to bid again on Fox if government regulators are successful in court in blocking AT&T’s purchase of Time Warner Inc. Like Comcast buying many of Fox’s assets, that proposed deal is another example of a large TV distributor attempting to own a TV programmer, what’s known as a vertical merger. A judge is expected to rule in June on whether to block or allow the AT&T transaction.

If the AT&T deal is approved, Comcast also may ultimately bid for 100 percent of Sky and the rest of Fox, CNBC reported. If Comcast does manage to consummate both deals, it would consolidate a wide swath of the media landscape, with the transactions totaling about $100 billion.

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Author: HEDGE

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