Walt Disney Co. may announce
a deal as soon as this week to acquire a large piece of 21st Century Fox
Inc., according to a person familiar with the matter, transferring legendary
Hollywood properties to new owners.
Comcast Corp., the other major
contender for the Fox assets, said Monday it’s no longer in the running.
A trust belonging to Fox
Executive Chairman Rupert Murdoch and his family would end up with a
small stake in Disney in the transaction, said the person, who asked
not to be identified because the discussions are private. Disney would
acquire Fox’s movie and TV studio, networks including FX and National Geographic,
and international assets including Star India’s TV channels and a 39 percent
stake in European satellite provider Sky Plc. Disney would also get Fox’s stake
in U.S. streaming-video provider Hulu, doubling its ownership to 60 percent.
21st Century Fox would keep Fox
News, the Fox broadcast network and Fox Sports 1. The company would remain
independent at least initially, though it could consider a merger later with
the Murdochs’ publishing company, News Corp., the person said. Fox Chief
Executive Officer James Murdoch is likely to be offered a senior position at
Disney after the transaction closes, the person said. That would put him in the
running as a candidate to eventually succeed Disney CEO Bob Iger.
The talks between Disney and Fox,
which began more than two months ago, will unite two giants of the
entertainment industry and mark a significant turning point for Rupert Murdoch,
the mogul who has spent the past seven decades assembling a media empire. A
deal will still face regulatory scrutiny in Washington, where the U.S. Justice
Department has sued to block another proposed media megamerger between AT&T
Inc. and Time Warner Inc.
A deal still hasn’t been
finalized, and the talks could fall apart. Fox shares rose 1.1
percent to $33.66 at the close in New York. Burbank, California-based
Disney climbed 2.5 percent to $106.83. Philadephia-based Comcast added 1.5
percent in late trading after announcing it’s no longer pursuing the assets,
and Sky was little changed at 1,000 pence at 9:38 a.m. in London.
“When a set of assets like 21st
Century Fox’s becomes available, it’s our responsibility to evaluate if there’s
a strategic fit that could benefit our company and our shareholders,” the cable
giant said in a statement. “That’s what we tried to do and we are no longer
engaged in the review of those assets. We never got the level of engagement
needed to make a definitive offer.”
In addition to Comcast, Verizon
Communications Inc. and Sony Corp. have also explored the idea of acquiring the
holdings. Fox’s studio would give Disney the rights to popular characters such
as the X-Men and the Simpsons, and could let the company cut costs by combining
two giant Hollywood operations. The Sky stake would give Disney 22.5
million customers in five countries in Europe, with leading advertising
technology, and Disney would be likely to seek full control of the satellite
Assuming Disney acquires the Fox
assets in a stock-based deal, Fox shareholders would end up with about 25
percent of Disney, according to Rosenblatt Securities Inc. The Murdoch family trust
holds an economic interest of about 16 percent in New York-based Fox, which
would translate to a stake of roughly 5 percent in Disney, according to data
compiled by Bloomberg.
With speculation mounting that a
deal was in the works, the Murdochs -- Rupert and his sons Lachlan and James --
sent a memo to employees late last week.
“We want to address the headlines
about us possibly talking to other companies about a potential transaction,”
the Murdochs said in the Dec. 7 email. “While we can’t comment on market
speculation, we do want to address the impact we know this is having on all of
you. Uncertainty always breeds unease. In every way, our focus is on our
businesses and on the welfare of all our colleagues.”
here for the original article from Bloomberg.