Comcast To Disney: Have Fun With FOX


The drama and suspense over the future of Twenty-First Century Fox, following the spin-off of certain assets into “New Fox,” is over.

“Comcast does not intend to pursue further the acquisition of the Twenty-First Century Fox assets and, instead, will focus on our recommended offer for Sky,” the company said Thursday morning, confirming that it very much wants the London-based global news network.

With that, the tussle over who will control Fox is over. The Walt Disney Company is free to continue with its sweetened offer, and complete a deal that will see the spinoff of a host of regional cable sports networks.

Brian L. Roberts, Comcast’s Chairman/CEO, even congratulated Disney’s C-Suite for its victory in the battle for Fox. “I’d like to congratulate Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company,” Roberts said.

Investors seem pleased with the end of the fight. At 11:38am Eastern, Disney shares were up 3%, to $114.04. Comcast was up 3.2%, to $35.12.

A sale to Disney of certain Fox assets has already received the Department of Justice’s blessing. But, there’s one big condition: Disney will be required to sell 22 Fox Regional Sports Networks.

The Fox deal does not include the nationally broadcast Fox News, Fox Business or Fox Sports networks, as those will be spun off into “New Fox.”

Disney emerged as the eventual belle at the ball on June 20, when it struck back at Comcast with the signing of “an amended acquisition agreement that would see it acquire 21CF for $38 per share in cash and stock.

This was done in response to Comcast’s “superior cash offer” that came after Disney’s original bid for Fox.

Indeed, it was a big bump upward from the June 12 offer from Comcast, which presented to Fox “a superior proposal” to acquire the businesses that Fox has agreed to sell to Disney for $35 per share in cash. Disney expanded its original offer in a big way — presenting a $10-per-share jump from Disney’s original offer of $28 per share for 21CF.

Comcast had presented Fox a counter-offer representing a premium of approximately 19% to the value of Disney’s all-stock offer as of Noon Eastern on June 13.

Disney’s final offer involves 50% cash and 50% stock. The company will pay approximately $35.7 billion in cash and issue roughly 343 million new shares to 21st Century Fox shareholders—representing about a 19% stake in Disney on a pro forma basis.

On word of Comcast’s decision to allow Disney to proceed with its purchase of Fox, financial house Raymond James raised its rating on Comcast to “Outperform” from “Market Perform,” suggesting that investor sentiment will improve in the next 12 months as it focuses on Sky, a global brand on par with CNN and the BBC.

“We are upgrading shares of Comcast … following its announcement that it will not make a superior offer for the Fox carve-out assets,” Raymond James’ Frank Louthan IV said in an investor note. “Our thesis on the operating business remained unchanged, as Comcast is the best positioned large-cap cable/telco name with predictable growth, cash returns to shareholders, low leverage, recurring revenue, and FCF growth.”