Comcast Fox deal

Update 6/20/2018: Bloomberg reports that Fox has accepted a $71.3 billion bid from Disney, which tops Comcast’s previous offer of $65 billion. Disney’s new offer “gives Fox shareholders the option to take their payment in the form of cash or stock, up to a 50-50 level”, and the company will also “take on about $13.8 billion of Fox’s net debt”, which brings the total value of the deal to north of $85 billion.

Update 6/19/2018: According to CNBC, Fox’s board meets tomorrow to discuss Comcast’s bid, and if Fox decides they prefer Comcast’s offer to Disney’s offer, Disney has five days to match. The Mouse House “is expected to add cash to its bid” in addition to the stock-based offer it currently has in place. Our original article follows.

Things just got slightly more complicated in the ongoing saga of 21st Century Fox. Many of the company’s assets were long thought to be acquired by Disney, but as promised, Comcast has now officially swooped in with a superior offer to acquire Fox’s film studio, most of its TV channels, and more. And it looks like they’re coming out swinging: a Comcast Fox deal would mean that Comcast would buy the Fox assets for a hefty $65 billion, far surpassing Disney’s offer of $52 billion.

Comcast originally outbid Disney back in December of last year, but Fox entered into a loose agreement with Disney largely partially because of fears about government regulations and antitrust concerns. The whole deal was basically put on hold as Hollywood waited to find out what would happen with AT&T’s attempt to acquire Time Warner. The Justice Department was opposed to the acquisition, but the case was taken to the courts and the verdict finally came in earlier this week. The U.S. government approved AT&T’s acquisition of Time Warner (including media companies like Warner Bros. and HBO), and emboldened by that decision, Comcast has now put in a significantly higher bid for 21st Century Fox’s assets.

The Verge reports that Comcast has offered to pay Fox shareholders $35.00 per share in cash, whereas Disney’s bid is all tied up in stock. That’s a grand total of $65 billion, which is 19% better than the current Disney offer. Comcast has also agreed to pay a $2.5 billion reverse breakup fee in case the acquisition actually does get squashed by the government. (Again, AT&T’s recent success seems to indicate that the government is fine with these huge acquisitions, so that may not be a factor.) Should Fox choose Comcast over Disney, Comcast will also pay Fox a $1.525 billion break-up fee that Fox would have to pay to Disney for backing out of their previous agreement.

We still don’t know who will ultimately emerge victorious from this transaction, but it almost certainly won’t be consumers. Fox being sold off to another media company means that’s one less place for storytellers to try to get projects made, which is bad news for anyone who values movies and TV that takes chances and colors outside the lines. And don’t forget, whoever wins this bid will also become the majority owner of Hulu. Was Disney planning on using Hulu’s tech to develop its own streaming service that debuts next year?

The Fox board is scheduled to meet and vote on what to do very soon, so we may be in for a flurry of new bids over the next few weeks.

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