Comcast in ‘advanced stages’ of preparing all-cash offer for Fox

Comcast has confirmed that it is considering making an all-cash offer for the Fox assets that have been offered to Disney for US$52billion (€44 billion).

In a statement, the corporation confirmed that it is, “considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney.”

These assets include Fox’s entertainment networks, movie studios, television production and international assets. They do not include the Fox News Channel, Fox Business Network and Fox Broadcasting Company, which are likely to be separated into what is now commonly referred to as “New Fox”.

Comcast added: “Any offer for Fox would be all-cash and at a premium to the value of the current all-share offer from Disney. The structure and terms of any offer by Comcast, including with respect to both the spin-off of “New Fox” and the regulatory risk provisions and the related termination fee, would be at least as favourable to Fox shareholders as the Disney offer.”

The news follows reports that Comcast had asked investment banks to increase a debt facility by as much as $60bn so it can make the offer, although the exact value of Comcast’s new bid is not clear.

Late last year Comcast had made a $64 billion offer to Fox alongside Disney, which was ultimately rejected. Fox cited regulatory hurdles as reasons to reject Comcast’s bid. With Comcast upping this offer, the bets are still on for what this will mean for the Disney/Fox merger, which was predicted to be completed by spring/summer 2019.

“Of course the main thing is it drives the price up. We expect the battle for consolidation amongst TV distributors, content and channel owners to continue because many people believe scaling up is essential to compete against the scaled digital platforms ­– Facebook, Amazon, Netflix, Google,” Ed Barton, chief analyst of entertainment at Ovum, told DTVE sister title TBI.

“There is a lot of money and resource being bet on this thesis and it’s not a given that it will necessarily work. Entertainment distribution has long been a scale game but it feels like we will enter a new era once these deals are completed,” Barton said.

UK hedge fund The Children’s Investment Fund (TCI), which has built up a 7.4% stake in 21^st Century Fox, has urged the Fox board to “immediately engage” with Comcast. In a letter to the board, TCI, which is run by Sir Christopher Hohn, highlighted a potential conflict of interest related to capital gains tax on the part of the Murdoch family that could lead them to prefer Disney’s offer and said that this must be “an irrelevant consideration” in weighing up the merits of the Comcast offer.

Speaking to analysts after the company’s Q3 results and before the latest announcement by Comcast, Fox chairman Lachlan Murdoch said that directors were “aware of their fiduciary duty on behalf of all shareholders”.