It took just 24 hours to answer any lingering questions about the extent to which AT&T’s seismic court victory on Tuesday would upend the TV industry.
Emboldened by the decision from U.S. District Judge Richard Leon, who approved AT&T’s $85 billion acquisition of Time Warner, Comcast announced today that it is making a $65 billion all-cash offer for 21st Century Fox in an effort to wrest the company away from Disney.
The move has been widely expected since Comcast confirmed three weeks ago it was preparing a bid to acquire most of Fox’s assets that was “superior” to Disney’s $52.4 billion offer.
In a letter to the Fox board of directors, Comcast CEO Brian Roberts said, “After our meetings last year, we came away convinced that the 21CF businesses to be sold are highly complementary to ours, and that our company would be the right strategic home for them.”
Roberts continued, “In light of yesterday’s decision in the AT&T/Time Warner case, the limited time prior to your shareholders’ meeting, and our strong continued interest, we are pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal.”
The proposal for Fox offers shareholders $35 per share in cash and 100 percent of the shares of New Fox after its proposed spinoff, which Roberts said provides “superior and more certain value as compared to Disney’s all-stock offer,” 19 percent below Disney’s bid.
Comcast, which held talks with Fox last fall, is escalating its efforts to derail Disney’s deal. In April, Comcast submitted a $31 billion bid for European broadcaster Sky, which Fox has been trying to buy and is a key element of Disney’s interest in that company.
Neither Disney nor Fox immediately replied to requests for comment about Comcast’s bid.
In its release last month, Comcast announced that it’s “considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney.” The company stressed that these businesses don’t include Fox News, Fox Business Network, Fox Broadcasting and “certain other assets,” which are also excluded from Disney’s bid.
The conventional wisdom was that if Leon’s ruling cleared the way for AT&T and Time Warner’s merger, Comcast would quickly move forward with its Fox bid.
Comcast had been in talks with Fox last fall, but Fox opted to go with Disney’s bid, in part because of regulatory concerns. Just days after Comcast and Fox ended negotiations in December, Disney announced it would acquire most of 21st Century Fox’s assets for $52.4 billion.
As talk intensified of Comcast’s renewed interest in buying Fox, Lachlan Murdoch, executive chairman of 21st Century Fox, reiterated on the company’s earnings call last month that “we are committed to our agreement with Disney and are working through the conditions to bring it to closing.” In response to speculation about other offers, he said the company’s directors “of course are aware of their fiduciary duties on behalf of all shareholders.”
During Comcast’s earnings call in April, Roberts said he “love[s] our core businesses” but stressed that “we didn’t choose to put Sky in play or any other asset [i.e., Fox] in play. That event happened around us. And the question is, do we take a look at it and engage?”
Fox shareholders are scheduled to vote on the Disney deal on July 10, but the vote could be postponed in light of Comcast’s new bid. “Because of your decision to schedule the vote on the Disney merger proposal for July 10, time is of the essence for your consideration of our proposal,” Roberts said in his letter to Fox.
The company that ultimately fails to land Fox could look elsewhere to compete alongside Facebook, Netflix and Google. CBS, Viacom, Lionsgate and Sony Pictures Entertainment are all potentially in play.
Roberts said Comcast would match Disney’s $2.5 billion breakup fee if the deal falls apart due to regulatory issues.