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Disney

Disney gets US antitrust approval to buy up Fox assets in blow to Comcast

Comcast still has time to respond. Fox cancelled a shareholder meeting to vote on the Disney deal that had been planned for July 10

PUBLISHED : Thursday, 28 June, 2018, 1:45am
UPDATED : Thursday, 28 June, 2018, 1:45am

Walt Disney has won US antitrust approval for its US$71 billion purchase of 21st Century Fox’s entertainment assets, raising hurdles for a potential rival bid from Comcast Corp.

Disney agreed to sell Fox’s 22 regional sports networks to resolve the Justice Department’s concerns that the deal would raise prices for cable sports programming in local markets, the department said Wednesday.

Fox accepts new Disney bid of US$71 billion, putting Comcast in tough spot

The approval is a victory for Disney in its battle with Comcast for one of the media industry’s biggest prizes. Fox last week accepted a sweetened bid from Disney, which upped its offer following Comcast’s competing US$65 billion bid. The US$38-a-share price is about US$10 a share higher than what Disney offered in December – and US$$3 above Comcast’s bid.

Comcast still has time to respond. Fox cancelled a shareholder meeting to vote on the Disney deal that had been planned for July 10.

Comcast is now mulling its next steps, including possibly teaming up with private equity investors in its pursuit of Fox assets, a person familiar with the situation said on Wednesday. Wall Street expects the cable giant to come back with a counter bid.

“Today’s settlement will ensure that sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution,” said Makan Delrahim, the head of the department’s antitrust division.

Disney rose to a session high after Bloomberg reported that the government clearance was imminent, climbing as much as 1.6 per cent to US$105.88. Fox gained up to 2.5 per cent, while Comcast was little changed.

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If the bidding reaches a high enough level – say, US$90 billion – the company may go to private equity firms or other backers for help, the Wall Street Journal reported earlier.

In one scenario, a strategic investor could take on Fox’s US assets – including the 20th Century Fox studio and regional sports networks – and leave Comcast with overseas assets.

Disney must sell the regional sports networks to a buyer acceptable to the US within 90 days of closing on the Fox deal.

The Disney-Comcast contest will determine who controls much of Rupert Murdoch’s empire, including Fox’s film and television studios, television networks such as FX, and multichannel providers like Star India and Sky Plc. At stake is a trove of media properties ranging from The Simpsons to X-Men.

Disney and Comcast are looking to use the Fox assets to bolster their content, expand overseas and fend off the threat from Netflix Inc. and other streaming upstarts. That threat prompted AT&T to buy Time Warner, a deal the government challenged and lost at trial earlier this month.

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Disney and Comcast have traded jabs over which bid would face an easier path to regulatory approval, an important consideration for Fox stockholders, who must weigh which deal to accept.

When Comcast made its bid for Fox, Comcast Chief Executive Officer Brian Roberts said in a letter to Murdoch and his sons that he is “highly confident” that Comcast will “obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction.”

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