After months of jockeying with its persistently better-positioned rival Disney, Comcast Corp. (the cable company and corporate parent of NBCUniversal) has officially ended its pursuit of 21st Century Fox’s entertainment assets and will instead focus on its offer for Sky.
By backing off, the cable giant is clearing the way for an epic bromance (pictured below) between Fox’s Rupert Murdoch and Disney CEO Bob Iger amid speculation that the House of Mouse’s offer of Disney stock would be more lucrative for the Murdoch family than Comcast’s cash bid, per the Washington Post.
Comcast had previously said it would submit a new bid after Disney topped its $65 billion all-cash offer. By backing away from the deal, Comcast will save itself (at least for now) from becoming one of the world’s most indebted companies.
But more importantly, its capitulation ends a contest with Disney that has simmered since June, and also follows the DOJ’s decision to challenge the (already completed) merger of AT&T and Time Warner, a “vertical merger” that has similar qualities to a (hypothetical) Comcast-Fox tieup (though Comcast said at the time it believed it could still compete for the merger). The company now says it will focus on its $34 billion bid to buy Sky, a European pay-TV service. That’s complicated by the fact that 21st Century Fox is bidding to buy the 61% of Sky that it doesn’t already own.
As Ross Gerber pointed out on Twitter, the decision to drop its pursuit of Fox could have ancillary benefits by convincing Disney to hand over its soon-to-be acquired Sky stake at a lower premium. Though Disney’s Bob Iger has referred to the Sky as a “crown jewel” of the acquisition of a portfolio of Fox entertainment and cable assets.
The best part of this is Comcast can now give Disney Fox a premium for Sky and lower the cost of the acquisition. Never really thought Disney needed this asset for their goals. Prefer less leverage. Love it. $dis $foxa $cmcsa #sky https://t.co/6jv1dHn8a1
— Ross Gerber (@GerberKawasaki) July 19, 2018
For many on Wall Street, Comcast’s defeat was already a foregone conclusion. Murdoch has made it clear from the beginning that he preferred Disney’s offer. But while Comcast is backing off (for now) the wave of media company consolidation (a wave that could be helped by business-friendly judge Brett Kavanaugh’s appointment to the Supreme Court) is expected to continue.
For now both Comcast’s and Disney’s share prices are higher…
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Author: Tyler Durden