Comcast has conceded defeat in its efforts to outbid Disney for 21st Century Fox.
This morning, the company announced it is bowing out of the battle for Fox, and will instead focus its efforts on securing 61 percent of European media giant Sky.
“Comcast does not intend to pursue further the acquisition of the 21st Century Fox assets and, instead, will focus on our recommended offer for Sky,” Comcast said in a statement.
Chairman and CEO Brian Roberts tipped his hat to Disney in a statement of his own: “I’d like to congratulate Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company.”
UPDATE: Disney chairman and CEO Robert Iger responded to Comcast’s news, which clears the way for his company to complete with merger with Fox, with the following statement: “Our incredible enthusiasm for this acquisition and the value it will create has continued to grow as we’ve come to know 21st Century Fox’s stellar array of talent and assets. We’re extremely pleased with today’s news, and our focus now is on completing the regulatory process and ultimately moving toward integrating our businesses.”
Last fall, Comcast had been in talks with Fox about a possible merger, but Fox ultimately opted for a $52.4 billion deal with Disney, which was announced last December.
But bolstered by the AT&T’s seismic court victory in June over the Justice Department, Comcast decided to pursue Fox after all, with a $65 billion offer on June 13. (The DOJ appealed the verdict last week.)
Disney regained the lead a week later by raising its bid to $71.3 billion.
Three weeks ago, the Justice Department approved Disney’s bid for Fox, which left Comcast on the outside looking in. If Comcast had wanted to counter Disney’s offer, it would have had to act before July 27, when Disney and Fox’s shareholders are set to vote on that deal.
Instead, Comcast decided to focus on its other bidding war, ironically with Fox, over control of Sky.
Those efforts accelerated last week, when Comcast increased its Sky bid to $34 billion. That trumped the new $32.5 billion offer from Fox (which already owns the other 39 percent of Sky) earlier that day. Before then, Comcast had been in the lead, with its $31 billion bid in April.
Last week, Comcast started to indicate that if it prevailed in its bid for Sky, it would be unlikely to continue pursuing Fox.
The European media behemoth has been an essential piece of Disney and Comcast’s interest in Fox. Sky creates content that it can distribute to its 23 million satellite and broadcast customers in five countries. Control of that company would extend both Disney and Comcast’s global presence and fortify their efforts to compete internationally with companies like Netflix.
Fox first bid for the remaining 61 percent of Sky in December 2016. That kicked off an arduous U.K. government review over concerns that the deal would give 21st Century Fox executive chairman Rupert Murdoch too much control over British news media.
Earlier this year, Fox agreed to sell all of Sky’s news operations to Disney (or Comcast, if that company had ended up prevailing), which is what finally secured the U.K.’s approval for the deal.
As that regulatory process dragged on, Comcast entered the fray in February with a Sky bid of its won. Comcast, which had no European media ownership conflicts, has already received U.K. government approval.
Comcast sees Sky as a way to achieve some of the scale and global reach it had been pursuing via Fox.
Disney will not be buying all of Fox’s assets with its $71.3 billion. Fox Broadcasting, Fox News, Fox Sports and Fox Business Network will be spun off into a company tentatively called New Fox, and Disney will be required to divest Fox’s 22 regional sports networks as part of the regulatory approval for the deal.