U.S. cable operator Comcast
Corp is asking investment banks to increase a bridge financing facility by as
much as $60 billion so it can make an all-cash offer for the media assets that
Twenty-First Century Fox Inc has agreed to sell to Walt Disney Co for $52
billion, three people familiar with the matter said on Monday.
Comcast Chief Executive
Brian Roberts only plans to proceed with the bid if a federal judge allows
AT&T Inc’s planned $85 billion acquisition of Time Warner Inc to proceed,
the sources said. The U.S. Department of Justice has opposed the AT&T-Time
Warner deal over antitrust concerns, and a decision from U.S. District Court
Judge Richard Leon is expected in June.
Disney Chief Executive Bob
Iger clinched an all-stock deal with Fox Executive Chairman Rupert Murdoch in
December to acquire Fox’s film, television and international businesses, giving
the world’s largest entertainment company an arsenal of shows and movies to
combat growing digital rivals Netflix Inc and Amazon.com Inc.
Comcast, owner of NBC and
Universal Pictures, has also made a 22 billion pound ($30 billion) offer to
acquire the 61 percent stake in European pay-TV group Sky Plc that Fox does not
already own. In doing so, it topped an earlier offer for the entirety of Sky by
Last November, Comcast
offered to acquire most of Fox’s assets in an all-stock deal valued at $34.41
per share, or $64 billion, a regulatory filing showed last month. Like Disney,
Comcast sought to buy Fox’s entertainment networks, movie studios, television
production and international assets, the filing shows.
Fox ended up announcing an
all-stock deal with Disney for $29.54 per share. In the regulatory filing,
Disney and Fox cited regulatory hurdles as reasons to reject Comcast’s bid,
even though they did not reference it by name.
The exact value of Comcast’s
new bid for the Fox assets is not yet clear, although the $60 billion in new
financing indicates it is seeking significant firepower to outbid Disney.
Comcast already has a $30 billion bridge loan to finance its Sky offer.
The sources asked not to be
identified because the matter is confidential. Comcast, Fox and Disney declined
Fox shares rose 5.13 percent
to $39.99 on the news in after-hours trading in New York on Monday. Comcast
shares were down 1.5 percent to $31.90, while Disney shares were down 0.5 percent
Murdoch, who owns close to a
17 percent stake in Fox and holds about 40 percent of the voting power, prefers
to be paid in stock rather than cash for the Fox assets, because this makes the
transaction non-taxable for shareholders, sources have said. It is not clear
how receptive he would be to an all-cash offer.
Last month’s regulatory
filing also showed that Fox viewed Disney’s stock as more valuable than
Comcast’s, based on historic prices, and felt that a deal between Disney and
Fox would generate greater long-term value. The Roberts family controls Comcast
through a dual-class stock structure.
Comcast’s stock has dropped
since then, from around $38 to about $32 now, giving the company a market
capitalization of $149 billion.
Disney has committed to
share buybacks as a way of returning cash to Fox shareholders. As a result,
Comcast sees an opening in being disruptive to the deal by making an all-cash
bid, according to the sources.
In its deal with Disney, Fox
agreed to separate the Fox Broadcasting network and stations, Fox News Channel,
Fox Business Network, its sports channels FS1, FS2 and the Big Ten Network,
into a newly listed company that it will spin off to its shareholders.
here for the original article from Reuters.