Fox to press on with Disney merger despite likely Comcast bid

https://www.theguardian.com/media/2018/may/09/fox-plans-merge-with-disney-to-take-control-of-sky-with-challenge-from-comcast

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The chairman of 21st Century Fox, Lachlan Murdoch, said the media company planned to press ahead with plans to merge with Disney and take full control of Sky on Wednesday but said the company was considering its options as cable giant Comcast prepares a higher bid.

Last December Fox agreed to sell most of its cable and studio assets to the Walt Disney Company. It is also looking to acquire the shares of Sky it doesn’t already own.

But those plans now face a challenge from Comcast, which is reportedly preparing a $60bn all-cash offer for the Fox properties and launched a separate bid for Sky last month.

On a call with analysts Murdoch said he would not comment on “market speculation”.

Murdoch said he expected to receive regulatory approval for the Sky deal “in a month or two”.

“Comcast has just begun its regulatory process and we believe it is very reasonable for Comcast to receive a robust regulatory review, which could take month,” he said.

But given Comcast’s bid, Murdoch said the company was considering its options with “a further announcement to be made in due course”.

Addressing the Disney deal Murdoch said the company was “committed to its agreement” and working through the conditions. But he added that the directors were “aware of their fiduciary duties to all shareholders”.

The cable company’s entry into the deal is likely to spark a bidding war for Fox as Comcast tries to press shareholders to accept its higher offer. The Murdochs have said they prefer Disney’s deal because its all-share offer is more tax efficient.

Comcast, which owns NBC and Universal as well as its vast cable operations, is waiting to launch its bid for Fox as the outcome of another media mega-deal is being weighed in the US courts. The justice department has challenged AT&T’s bid for Time Warner, arguing it would be bad for consumers.

That case closed earlier this month and if the judge rules against the government, it is likely to strengthen Comcast’s plans to acquire Disney.

In a note to clients, BTIG analyst Richard Greenfield argued that Comcast would face fewer issues than Disney in getting a Fox deal approved.

Disney and Fox together accounted for 45% of US box office this year compared to Comcast-owned Universal’s 9%, thanks to the success of mega-hits such as Disney’s Black Panther, and Fox’s Oscar-winning The Shape of Water and The Greatest Showman.

“If Fox is willing to engage Comcast and entertain a higher cash bid, it puts Disney in a difficult situation,” Greenfield wrote. “Disney has never been in an all-out bidding war for a major asset, so this becomes uncharted territory.”