11 ms·

Comcast, in 2nd Try, Offers $65B Cash for 21st Century Fox

206 points by peterlk 8y ago

symlock 8y ago
> "...had rejected Comcast’s earlier offer partly on concerns the government would block the deal." > "we are pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal." Anyone know why else the Comcast's offer last year was rejected? The article hints at cash vs stock as possibly being another reason.
- craftyguy 8y ago
  If they think it'll be approved now because of the switch to cash (from stock), then that seems to suggest the advertised reason (government blocking it) was not really a real reason. Unless they thought the gov. would block it because it was stock and not cash?
  - milcron 8y ago
    They could have more confidence now since the AT&T merger with Time Warner.
    - craftyguy 8y ago
      True, since there's an overall government trend towards anti anti-trust.
- JoshTriplett 8y ago
  One relevant factor the article doesn't mention: some deals of this type include a breakup fee to hedge against the possible rejection of the deal by the government. (Or, for that matter, a party to the deal backing out at a late stage.)
  - weej 8y ago
    The Verge article called the fee out. It's $4.025B, and Comcast offered to pay all of it (Disney & Fox's portions) in addition to the premium cash offer. https://www.theverge.com/2018/6/13/17457244/comcast-21st-century-fox-film-tv-studios-acquisition-deal-announced https://www.theverge.com/2018/6/13/17457244/comcast-21st-cen...
- mmanfrin 8y ago
  Fear of the merger being blocked by the Feds. After of the approval AT&T got to buy TW yesterday, Fox shares jumped 7%.
InTheArena 8y ago
This is going to be a huge mess. The bid was rejected last year due to doubts that the deal would go through, and also that the Murdoch family was much more comfortable with Disney, which has a solid reputation of dealing with acquisitions (Marvel, Lucasfilm, Pixar) as opposed to Comcast. This deal now being all stock is designed to cause a revolt from the rest of the ownership interest in Fox from the Murdochs, who want the Disney deal. Hulu is one of the crown jewels here. Because of the way the contracts are structured, whoever buys Fox, gets total control of Hulu. There were some court orders that recently expired on Hulu which is part of the behind the scenes reason this war is going on now. The breakup fee is a lot of cash here - Disney had made a similar guaranteed (2.5 billion), but Fox itself will be on the hook for 1.52 billion if they break off for Disney in favor of Comcast. There's been a lot of speculation that part of the deal with Fox was that James Murdoch would eventually be the heir apparent to Bob Iger. That speculation faded a bit, but still something to keep a eye on. What what happens with Hulu and with the Murdoch controlling interest in Fox. It may take a shareholder revolt to go with Fox over Disney. I don't see this deal as a must-win for Disney. They have the possibility to go over the top with their new Disney streaming service, and they have all the content in the world right now. Disney lawyers will probably find some event to use to justify yanking the Marvel rights from Comcast if this deal goes through.
- dragonwriter 8y ago
  > Disney lawyers will probably find some event to use to justify yanking the Marvel rights from Comcast if this deal goes through. Probably not that hard; licensing deals very often have change of ownership clauses exactly to prevent someone purchasing the licenses to get the license without the licensor having a say.
  - InTheArena 8y ago
    The Marvel contract has proven remarkably difficult to deal with, and there are empires that have been funded in Florida as disney tries to find a way to undo it.
    - 8y ago
tnn225 8y ago
At $80B market cap, why would 21st Centure Fox be sold at either $65B or $52.4B? https://finance.yahoo.com/quote/FOX/ https://finance.yahoo.com/quote/FOX/
- BigChiefSmokem 8y ago
  From last year's merger notes: "As part of the Disney-Fox merger, 21st Century Fox will spin off Fox News, Fox Business, and the Fox broadcasting network into a new, separately traded company... The new company under which Fox News will operate has yet to be named, but it will be a lot leaner, which may ultimately work in the network’s favor. Right now, it’s just being referred to as New Fox. (The company will also include FS1, FS2, and Fox Television Stations Group, Big Ten Network.)" I'm guessing Fox News is worth the other $15 billion to the Murdochs.
kevin_b_er 8y ago
The "Big Three" television networks will become the "Big Two". The "Big 6" film becomes the "Big 5". You can mark this as another major event in the consolation and monopolization of news and entertainment under a rapidly growing singular corporate umbrella.
- dave5104 8y ago
  The Fox cable/broadcast networks aren't part of this deal. They aren't being sold.
  - DerekL 8y ago
    To be more precise, Fox is keeping the FOX broadcast network and the affiliates it already owns, Fox News, Fox Business, and Fox Sports. The Disney sale includes FX, the National Geographic channel, and regional sports cable channels.
- jonknee 8y ago
  On the other hand, Netflix is making more content than the "Big Three" ever did.
- KaoruAoiShiho 8y ago
  It's ok. The big 3 legacy networks are consolidating because they're coming under increasing competition from FAANG. Honestly FAANG is scarier than the media companies ever were.
- realaz8282 8y ago
  And they’re all competing with YouTube, Netflix, Amazon, Vimeo, HBO and numerous other streaming services Demand is so easy to satisfy with an alternative, they’re really no longer the big guns As a childhood fan of DC and Marvel and Star Wars, I’m sucked in by nostalgia My kids are pushing 10 and 7 and can’t care less about that stuff The specific properties hot today may not be all over toy aisles in a generation with how easy it’s becoming to crank out derivatives
- throwawayqdhd 8y ago
shmerl 8y ago
How did the previous court decision go through for AT&T? I really don't get what's wrong with that judge (besides may be possible corruption). Comcast now will be using all that as an excuse.
- adventured 8y ago
  The argument is that it's because there wasn't a large amount of overlap in regards to concentration of a given market position. Time Warner is a content owner/producer/broadcast networks/etc. primarily. AT&T is mostly a telecom company. You can usually get away with extraordinarily large mergers under US anti-trust law, so long as you're not overly concentrating the ownership of a given market. AT&T wouldn't be allowed to buy Verizon or T-Mobile for example. If Apple wants to buy Fox they'd likely be allowed to. If Apple wanted to buy Google, they'd likely be blocked. Microsoft could buy John Deere or 3M or GM, they couldn't buy Amazon or Facebook (disregarding market caps for a moment).
  - whatshisface 8y ago
    >If Apple wanted to buy Google, they'd likely be blocked. Apple makes almost all of their money from things that Google doesn't make much money from - if you spun off all of Google's distant second fiddles off, along with Apple's software wanderings, you'd end up with a central core of AdWords and the iPhone. They don't compete.
    - adventured 8y ago
      The reason Apple wouldn't be allowed to buy Google, is because it would concetrate Android + Iphone + Google search. So the entire US smartphone OS market and the search market would all be under control of one company. Adwords unto itself isn't what would cause the problem. The principle delivery mechanism for Adwords is: search and Android.
      - whatshisface 8y ago
        Google doesn't make nearly as much money from Android as it does AdWords and Search. Apple isn't in the search market. So, if Alphabet sells Search+AdWords to Apple, Apple will end up with 99% of Alphabet revenue without merging any competition at all.
ggm 8y ago
Although it's tempting to consider this a purely domestic USA matter, it has huge ramifications worldwide for IPR and entertainment product, presented to the consumer. I don't watch TV very much any more, and am not a subscriber to netflix or any like service (I watch news on PBS and a small number of things free to air, on a PVR on time delay) But I believe the significance of this deal will be the effect on content production and over-the-internet content delivery worldwide: The material coming out of Disney is going to a lot of eyeballs...
simplify 8y ago
This is scary. Are there any orgs we can support that are against big merges like these?
- shp0ngle 8y ago
  I am more for Comcast - Fox merger than Disney - Fox merger personally. It's scary, but hey, this is America.
  - BigChiefSmokem 8y ago
    Could you explain your reasoning? Just curious.
    - shp0ngle 8y ago
      Fox and Disney do the same thing and will become a near monopoly. Comcast and Fox do different things.
      - HedgeSparrow 8y ago
        I am pretty sure this acquisition would just make Comcast a bigger "near monopoly" in both industries of "things," but I see where you're coming from.
  - dave5104 8y ago
    Comcast shouldn't be getting anything. Media and the tubes that carry it should remain separate.
    - what_ever 8y ago
      Except that Fox channels on the TV are not part of the Fox being sold.
      - dave5104 8y ago
aspectmin 8y ago
I'm curious how Comcast has access to $65B in cash? Do they actually have this they can pull on, or does some investment firm find a deal like this?
- jonknee 8y ago
  In M&A cash means loans, not equity. If successful they'll probably issue a lot of bonds, but in the immediate term it would be loans.
- gesman 8y ago
  They saved a lot on customer support over the years :)
pooya13 8y ago
Let's just have one media / telecommunications company and get it over with. We could call it the big brother.
makecheck 8y ago
I’d feel a lot better about acquisitions if it ever resulted in anything better. Oh, they all say “now we’ll be able to do $WONDERFUL_THING” to ensure the deal is approved. After that, it’s either: something that people really like is killed off to save 4 cents a year, or service becomes crappier, or monthly bills mysteriously go up, or all of the above.
Animats 8y ago
We're headed for two giant entertainment conglomerates. It's never been this centralized before. RCA's Sarnoff once dreamed of such centralization, but never achieved it. You may need a Comcast connection and an AT&T connection to get content from both.
- acchow 8y ago
  Four. New entrants Netflix and Amazon will rise to the top soon.
  - kgwgk 8y ago
    Unless Verizon buys Netflix, or Amazon buys Sprint, or any other similiar combination of content and carrier, how is that comparable? Edit: if you’re talking just about owning exclusive content I would say Disney is above Netflix or Amazon.
    - acchow 8y ago
      Verizon buys Netflix? That would be the largest acquisition in history...
      - kgwgk 8y ago
        Or Netflix buys Verizon if you find it more likely, or they combine anyhow in a TimeWarner/AOL kind of peak-insanity deal. The point is that Netflix or Amazon are not cable/internet companies that could use their content to sell connections.
- igravious 8y ago
  Two? According to Statista these are the rankings† of US media companies by revenue in 2017 (in € billion) 72.64 Comcast 50.26 The Walt Disney Company 32.94 AT&T Entertainment Group 31.18 News Corp. Ltd. / 21st Century Fox 26.49 Time Warner Inc. 23.18 Viacom Inc. / CBS Corp. For comparison Netflix's 2017 revenue in € was 9.9 You'll notice that I left out internet media companies like Alphabet, social media companies like Facebook, telecommunication companies like Charter Comm., and tech giants like Amazon.com and Apple. I did this to purely focus on conglomerates with significant traditional media holdings. Given that these six companies allegedly controlled 90% of the media landscape‡ in 2012 it is worrying that either Comcast or Disney would be allowed to swallow Fox. (I am unsure what the percentage figure is now.) I think it is especially worrying that content creation and media distribution is allowed in the same company. I guess we have AOL Time Warner to thank for that precedent? Finally, it is unclear to me how separate News Corp is from 21st Century Fox. Wikipedia says, “On 28 June 2012, after concerns from shareholders in response to its recent scandals and to "unlock even greater long-term shareholder value", founder Rupert Murdoch announced that News Corporation's assets would be split into two publicly traded companies, one oriented towards media, and the other towards publishing. The corporate spin-off formally took place on 28 June 2013; where the present News Corp. was renamed 21st Century Fox and consists primarily of media outlets, while a new News Corp was formed to take on the publishing and Australian broadcasting assets.” This would suggest that the revenues of 21st Century Fox are a lot less than the combined revenues of News Corp. Ltd. / 21st Century Fox combined. † https://www.statista.com/statistics/272469/largest-media-companies-worldwide/ https://www.statista.com/statistics/272469/largest-media-com... ‡ http://uk.businessinsider.com/these-6-corporations-control-90-of-the-media-in-america-2012-6 http://uk.businessinsider.com/these-6-corporations-control-9...
txsh 8y ago
Could it be that Comcast is just trying to increase the price of Fox to stop Disney from buying it or at least make them pay a lot more for it?

206 points by peterlk 8y ago

> "...had rejected Comcast’s earlier offer partly on concerns the government would block the deal." > "we are pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal." Anyone know why else the Comcast's offer last year was rejected? The article hints at cash vs stock as possibly being another reason.

craftyguy 8y ago
If they think it'll be approved now because of the switch to cash (from stock), then that seems to suggest the advertised reason (government blocking it) was not really a real reason. Unless they thought the gov. would block it because it was stock and not cash?
- milcron 8y ago
  They could have more confidence now since the AT&T merger with Time Warner.
  - craftyguy 8y ago
    True, since there's an overall government trend towards anti anti-trust.
JoshTriplett 8y ago
One relevant factor the article doesn't mention: some deals of this type include a breakup fee to hedge against the possible rejection of the deal by the government. (Or, for that matter, a party to the deal backing out at a late stage.)
- weej 8y ago
  The Verge article called the fee out. It's $4.025B, and Comcast offered to pay all of it (Disney & Fox's portions) in addition to the premium cash offer. https://www.theverge.com/2018/6/13/17457244/comcast-21st-century-fox-film-tv-studios-acquisition-deal-announced https://www.theverge.com/2018/6/13/17457244/comcast-21st-cen...
mmanfrin 8y ago
Fear of the merger being blocked by the Feds. After of the approval AT&T got to buy TW yesterday, Fox shares jumped 7%.

InTheArena 8y ago

This is going to be a huge mess. The bid was rejected last year due to doubts that the deal would go through, and also that the Murdoch family was much more comfortable with Disney, which has a solid reputation of dealing with acquisitions (Marvel, Lucasfilm, Pixar) as opposed to Comcast. This deal now being all stock is designed to cause a revolt from the rest of the ownership interest in Fox from the Murdochs, who want the Disney deal. Hulu is one of the crown jewels here. Because of the way the contracts are structured, whoever buys Fox, gets total control of Hulu. There were some court orders that recently expired on Hulu which is part of the behind the scenes reason this war is going on now. The breakup fee is a lot of cash here - Disney had made a similar guaranteed (2.5 billion), but Fox itself will be on the hook for 1.52 billion if they break off for Disney in favor of Comcast. There's been a lot of speculation that part of the deal with Fox was that James Murdoch would eventually be the heir apparent to Bob Iger. That speculation faded a bit, but still something to keep a eye on. What what happens with Hulu and with the Murdoch controlling interest in Fox. It may take a shareholder revolt to go with Fox over Disney. I don't see this deal as a must-win for Disney. They have the possibility to go over the top with their new Disney streaming service, and they have all the content in the world right now. Disney lawyers will probably find some event to use to justify yanking the Marvel rights from Comcast if this deal goes through.

dragonwriter 8y ago
> Disney lawyers will probably find some event to use to justify yanking the Marvel rights from Comcast if this deal goes through. Probably not that hard; licensing deals very often have change of ownership clauses exactly to prevent someone purchasing the licenses to get the license without the licensor having a say.
- InTheArena 8y ago
  The Marvel contract has proven remarkably difficult to deal with, and there are empires that have been funded in Florida as disney tries to find a way to undo it.
  - 8y ago

tnn225 8y ago

At $80B market cap, why would 21st Centure Fox be sold at either $65B or $52.4B? https://finance.yahoo.com/quote/FOX/ https://finance.yahoo.com/quote/FOX/

BigChiefSmokem 8y ago
From last year's merger notes: "As part of the Disney-Fox merger, 21st Century Fox will spin off Fox News, Fox Business, and the Fox broadcasting network into a new, separately traded company... The new company under which Fox News will operate has yet to be named, but it will be a lot leaner, which may ultimately work in the network’s favor. Right now, it’s just being referred to as New Fox. (The company will also include FS1, FS2, and Fox Television Stations Group, Big Ten Network.)" I'm guessing Fox News is worth the other $15 billion to the Murdochs.

kevin_b_er 8y ago

The "Big Three" television networks will become the "Big Two". The "Big 6" film becomes the "Big 5". You can mark this as another major event in the consolation and monopolization of news and entertainment under a rapidly growing singular corporate umbrella.

dave5104 8y ago
The Fox cable/broadcast networks aren't part of this deal. They aren't being sold.
- DerekL 8y ago
  To be more precise, Fox is keeping the FOX broadcast network and the affiliates it already owns, Fox News, Fox Business, and Fox Sports. The Disney sale includes FX, the National Geographic channel, and regional sports cable channels.
jonknee 8y ago
On the other hand, Netflix is making more content than the "Big Three" ever did.
KaoruAoiShiho 8y ago
It's ok. The big 3 legacy networks are consolidating because they're coming under increasing competition from FAANG. Honestly FAANG is scarier than the media companies ever were.
realaz8282 8y ago
And they’re all competing with YouTube, Netflix, Amazon, Vimeo, HBO and numerous other streaming services Demand is so easy to satisfy with an alternative, they’re really no longer the big guns As a childhood fan of DC and Marvel and Star Wars, I’m sucked in by nostalgia My kids are pushing 10 and 7 and can’t care less about that stuff The specific properties hot today may not be all over toy aisles in a generation with how easy it’s becoming to crank out derivatives
throwawayqdhd 8y ago

shmerl 8y ago

How did the previous court decision go through for AT&T? I really don't get what's wrong with that judge (besides may be possible corruption). Comcast now will be using all that as an excuse.

adventured 8y ago
The argument is that it's because there wasn't a large amount of overlap in regards to concentration of a given market position. Time Warner is a content owner/producer/broadcast networks/etc. primarily. AT&T is mostly a telecom company. You can usually get away with extraordinarily large mergers under US anti-trust law, so long as you're not overly concentrating the ownership of a given market. AT&T wouldn't be allowed to buy Verizon or T-Mobile for example. If Apple wants to buy Fox they'd likely be allowed to. If Apple wanted to buy Google, they'd likely be blocked. Microsoft could buy John Deere or 3M or GM, they couldn't buy Amazon or Facebook (disregarding market caps for a moment).
- whatshisface 8y ago
  >If Apple wanted to buy Google, they'd likely be blocked. Apple makes almost all of their money from things that Google doesn't make much money from - if you spun off all of Google's distant second fiddles off, along with Apple's software wanderings, you'd end up with a central core of AdWords and the iPhone. They don't compete.
  - adventured 8y ago
    The reason Apple wouldn't be allowed to buy Google, is because it would concetrate Android + Iphone + Google search. So the entire US smartphone OS market and the search market would all be under control of one company. Adwords unto itself isn't what would cause the problem. The principle delivery mechanism for Adwords is: search and Android.
    - whatshisface 8y ago
      Google doesn't make nearly as much money from Android as it does AdWords and Search. Apple isn't in the search market. So, if Alphabet sells Search+AdWords to Apple, Apple will end up with 99% of Alphabet revenue without merging any competition at all.

ggm 8y ago

Although it's tempting to consider this a purely domestic USA matter, it has huge ramifications worldwide for IPR and entertainment product, presented to the consumer. I don't watch TV very much any more, and am not a subscriber to netflix or any like service (I watch news on PBS and a small number of things free to air, on a PVR on time delay) But I believe the significance of this deal will be the effect on content production and over-the-internet content delivery worldwide: The material coming out of Disney is going to a lot of eyeballs...

simplify 8y ago

This is scary. Are there any orgs we can support that are against big merges like these?

shp0ngle 8y ago
I am more for Comcast - Fox merger than Disney - Fox merger personally. It's scary, but hey, this is America.
- BigChiefSmokem 8y ago
  Could you explain your reasoning? Just curious.
  - shp0ngle 8y ago
    Fox and Disney do the same thing and will become a near monopoly. Comcast and Fox do different things.
    - HedgeSparrow 8y ago
      I am pretty sure this acquisition would just make Comcast a bigger "near monopoly" in both industries of "things," but I see where you're coming from.
- dave5104 8y ago
  Comcast shouldn't be getting anything. Media and the tubes that carry it should remain separate.
  - what_ever 8y ago
    Except that Fox channels on the TV are not part of the Fox being sold.
    - dave5104 8y ago

aspectmin 8y ago

I'm curious how Comcast has access to $65B in cash? Do they actually have this they can pull on, or does some investment firm find a deal like this?

jonknee 8y ago
In M&A cash means loans, not equity. If successful they'll probably issue a lot of bonds, but in the immediate term it would be loans.
gesman 8y ago
They saved a lot on customer support over the years :)

pooya13 8y ago

Let's just have one media / telecommunications company and get it over with. We could call it the big brother.

makecheck 8y ago

I’d feel a lot better about acquisitions if it ever resulted in anything better. Oh, they all say “now we’ll be able to do $WONDERFUL_THING” to ensure the deal is approved. After that, it’s either: something that people really like is killed off to save 4 cents a year, or service becomes crappier, or monthly bills mysteriously go up, or all of the above.

Animats 8y ago

We're headed for two giant entertainment conglomerates. It's never been this centralized before. RCA's Sarnoff once dreamed of such centralization, but never achieved it. You may need a Comcast connection and an AT&T connection to get content from both.

acchow 8y ago
Four. New entrants Netflix and Amazon will rise to the top soon.
- kgwgk 8y ago
  Unless Verizon buys Netflix, or Amazon buys Sprint, or any other similiar combination of content and carrier, how is that comparable? Edit: if you’re talking just about owning exclusive content I would say Disney is above Netflix or Amazon.
  - acchow 8y ago
    Verizon buys Netflix? That would be the largest acquisition in history...
    - kgwgk 8y ago
      Or Netflix buys Verizon if you find it more likely, or they combine anyhow in a TimeWarner/AOL kind of peak-insanity deal. The point is that Netflix or Amazon are not cable/internet companies that could use their content to sell connections.
igravious 8y ago
Two? According to Statista these are the rankings† of US media companies by revenue in 2017 (in € billion) 72.64 Comcast 50.26 The Walt Disney Company 32.94 AT&T Entertainment Group 31.18 News Corp. Ltd. / 21st Century Fox 26.49 Time Warner Inc. 23.18 Viacom Inc. / CBS Corp. For comparison Netflix's 2017 revenue in € was 9.9 You'll notice that I left out internet media companies like Alphabet, social media companies like Facebook, telecommunication companies like Charter Comm., and tech giants like Amazon.com and Apple. I did this to purely focus on conglomerates with significant traditional media holdings. Given that these six companies allegedly controlled 90% of the media landscape‡ in 2012 it is worrying that either Comcast or Disney would be allowed to swallow Fox. (I am unsure what the percentage figure is now.) I think it is especially worrying that content creation and media distribution is allowed in the same company. I guess we have AOL Time Warner to thank for that precedent? Finally, it is unclear to me how separate News Corp is from 21st Century Fox. Wikipedia says, “On 28 June 2012, after concerns from shareholders in response to its recent scandals and to "unlock even greater long-term shareholder value", founder Rupert Murdoch announced that News Corporation's assets would be split into two publicly traded companies, one oriented towards media, and the other towards publishing. The corporate spin-off formally took place on 28 June 2013; where the present News Corp. was renamed 21st Century Fox and consists primarily of media outlets, while a new News Corp was formed to take on the publishing and Australian broadcasting assets.” This would suggest that the revenues of 21st Century Fox are a lot less than the combined revenues of News Corp. Ltd. / 21st Century Fox combined. † https://www.statista.com/statistics/272469/largest-media-companies-worldwide/ https://www.statista.com/statistics/272469/largest-media-com... ‡ http://uk.businessinsider.com/these-6-corporations-control-90-of-the-media-in-america-2012-6 http://uk.businessinsider.com/these-6-corporations-control-9...

txsh 8y ago

Could it be that Comcast is just trying to increase the price of Fox to stop Disney from buying it or at least make them pay a lot more for it?