Comcast Offers More Than Disney For Fox

Comcast (NASDAQ: CMCSA) has formalized a $65 billion all-cash bid for most of 21st Century Fox (NASDAQ: FOX), topping Disney’s (NYSE: DIS) $52.4 billion bid for the same film and TV assets. Comcast also said it would cover the $1.5 billion breakup fee that Fox would owe Disney if it backed out of that deal. Fox’s board now will need to determine whether Comcast’s offer is reasonably likely to be better than Disney’s. Should the board decide in Comcast’s favor, Disney would have five days to come up with a counter offer.

The move by Comcast could set off a high-stakes bidding war. There are many reasons why Fox would be a valuable asset for either company. Both companies would face similar regulatory hurdles, so the chances of either deal being approved by regulators is about the same. Comcast CEO Brian Roberts wrote that Comcast is “highly confident” its offer will “obtain all necessary regulatory approvals in a timely manner.”

The company that ends up as the winner would gain a number of valuable properties. Fox’s movie studio, which is responsible for franchises like “Avatar” and “X-Men,” is part of the deal. So is its highly regarded arthouse-movie shop Fox Searchlight. According to Box Office Mojo, Fox’s studios collected more than $1.4 billion at the box office last year.

The deal also includes Fox’s television studio and cable channels like FX and National Geographic. Neither channel is a huge moneymaker, but they could be valuable for extra content to push onto streaming platforms. Fox’s Rupert Murdoch would be keeping Fox News, the Fox Sports national cable channels and the Fox broadcasting network to be spun off into a new company.

Also at stake is Fox’s regional sports networks. Fox owns 22 regional sports networks, while Disney owns ESPN and Comcast controls NBC Sports and nine regional sports networks. Comcast is willing to divest Fox’s regional sports networks if regulators demand it. Disney has made the same concession.

The deal is also complicated by the parties’ stake in Hulu, the streaming service with 20 million viewers. Fox, Disney, and Comcast each own a 30 percent stake in the online video service. The winner of the deal would control the majority of the service with Time Warner owning the remaining 10 percent. A source familiar with the company’s thinking said Comcast wants Fox’s stake in Hulu but would part with it if necessary to satisfy regulators.

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