
Comcast, in 2nd Try, Offers $65B Cash for 21st Century Fox - peterlk
https://www.nytimes.com/2018/06/13/business/media/comcast-fox-disney-bidding-war.html
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InTheArena
This is going to be a huge mess. The bid was rejected last year due to doubts
that the deal would go through, and also that the Murdoch family was much more
comfortable with Disney, which has a solid reputation of dealing with
acquisitions (Marvel, Lucasfilm, Pixar) as opposed to Comcast. This deal now
being all stock is designed to cause a revolt from the rest of the ownership
interest in Fox from the Murdochs, who want the Disney deal.

Hulu is one of the crown jewels here. Because of the way the contracts are
structured, whoever buys Fox, gets total control of Hulu. There were some
court orders that recently expired on Hulu which is part of the behind the
scenes reason this war is going on now.

The breakup fee is a lot of cash here - Disney had made a similar guaranteed
(2.5 billion), but Fox itself will be on the hook for 1.52 billion if they
break off for Disney in favor of Comcast.

There's been a lot of speculation that part of the deal with Fox was that
James Murdoch would eventually be the heir apparent to Bob Iger. That
speculation faded a bit, but still something to keep a eye on.

What what happens with Hulu and with the Murdoch controlling interest in Fox.
It may take a shareholder revolt to go with Fox over Disney.

I don't see this deal as a must-win for Disney. They have the possibility to
go over the top with their new Disney streaming service, and they have all the
content in the world right now. Disney lawyers will probably find some event
to use to justify yanking the Marvel rights from Comcast if this deal goes
through.

~~~
slg
>Hulu is one of the crown jewels here.

Maybe for Comcast, but I doubt it is for Disney. Disney already purchased
BAMTech which handles streaming for MLB, HBO, ESPN, League Of Legends, and
many others. They have been working towards using that technology for a Disney
streaming service that will debut sometime in 2019. That company is already
closing in on Hulu in terms of value and would make integrating Hulu's tech
and employees difficult. The only real value Hulu gives Disney is contracts
for content, but those contract are only temporary and good content is still
the core competency of Disney. It wouldn't surprise me if Disney proposed the
original deal with the expectation that they would need to sell off Hulu to a
competitor in order to get the political capital for approval for the rest of
the deal.

~~~
josephpmay
Hearsay, but...

I’ve heard that last year Disney blocked an attempt from Apple to buy Hulu,
which suggests that it is still pretty important to them

~~~
iainmerrick
I’m curious, how would they go about blocking it?

~~~
syshum
Disney Owns 30% of Hulu today, Fox owns 30% and Comcast owns 30%

If either Disney or Comcast buys Fox will become 60% owner, however being a
30% owner is likely enough power to have enough influence to block a sale to
Apple..

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kevin_b_er
The "Big Three" television networks will become the "Big Two". The "Big 6"
film becomes the "Big 5". You can mark this as another major event in the
consolation and monopolization of news and entertainment under a rapidly
growing singular corporate umbrella.

~~~
dave5104
The Fox cable/broadcast networks aren't part of this deal. They aren't being
sold.

~~~
DerekL
To be more precise, Fox is keeping the FOX broadcast network and the
affiliates it already owns, Fox News, Fox Business, and Fox Sports. The Disney
sale includes FX, the National Geographic channel, and regional sports cable
channels.

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makecheck
I’d feel a lot better about acquisitions if it _ever_ resulted in anything
better. Oh, they all _say_ “now we’ll be able to do $WONDERFUL_THING” to
ensure the deal is approved. After that, it’s either: something that people
really like is killed off to save 4 cents a year, or service becomes crappier,
or monthly bills mysteriously go up, or all of the above.

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ggm
Although it's tempting to consider this a purely domestic USA matter, it has
huge ramifications worldwide for IPR and entertainment product, presented to
the consumer. I don't watch TV very much any more, and am not a subscriber to
netflix or any like service (I watch news on PBS and a small number of things
free to air, on a PVR on time delay) But I believe the significance of this
deal will be the effect on content production and over-the-internet content
delivery worldwide: The material coming out of Disney is going to a lot of
eyeballs...

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tnn225
At $80B market cap, why would 21st Centure Fox be sold at either $65B or
$52.4B?

[https://finance.yahoo.com/quote/FOX/](https://finance.yahoo.com/quote/FOX/)

~~~
BigChiefSmokem
From last year's merger notes:

"As part of the Disney-Fox merger, 21st Century Fox will spin off Fox News,
Fox Business, and the Fox broadcasting network into a new, separately traded
company...

The new company under which Fox News will operate has yet to be named, but it
will be a lot leaner, which may ultimately work in the network’s favor. Right
now, it’s just being referred to as New Fox. (The company will also include
FS1, FS2, and Fox Television Stations Group, Big Ten Network.)"

I'm guessing Fox News is worth the other $15 billion to the Murdochs.

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Animats
We're headed for two giant entertainment conglomerates. It's never been this
centralized before. RCA's Sarnoff once dreamed of such centralization, but
never achieved it.

You may need a Comcast connection and an AT&T connection to get content from
both.

~~~
igravious
Two?

According to Statista these are the rankings† of US media companies by revenue
in 2017 (in € billion)

    
    
       72.64 Comcast
       50.26 The Walt Disney Company
       32.94 AT&T Entertainment Group
       31.18 News Corp. Ltd. / 21st Century Fox
       26.49 Time Warner Inc.
       23.18 Viacom Inc. / CBS Corp.
    

For comparison Netflix's 2017 revenue in € was 9.9

You'll notice that I left out internet media companies like Alphabet, social
media companies like Facebook, telecommunication companies like Charter Comm.,
and tech giants like Amazon.com and Apple. I did this to purely focus on
conglomerates with significant traditional media holdings.

Given that these six companies allegedly controlled 90% of the media
landscape‡ in 2012 it is worrying that either Comcast or Disney would be
allowed to swallow Fox. (I am unsure what the percentage figure is now.)

I think it is _especially_ worrying that content creation and media
distribution is allowed in the same company. I guess we have AOL Time Warner
to thank for that precedent?

Finally, it is unclear to me how separate News Corp is from 21st Century Fox.
Wikipedia says, “On 28 June 2012, after concerns from shareholders in response
to its recent scandals and to "unlock even greater long-term shareholder
value", founder Rupert Murdoch announced that News Corporation's assets would
be split into two publicly traded companies, one oriented towards media, and
the other towards publishing. The corporate spin-off formally took place on 28
June 2013; where the present News Corp. was renamed 21st Century Fox and
consists primarily of media outlets, while a new News Corp was formed to take
on the publishing and Australian broadcasting assets.”

This would suggest that the revenues of 21st Century Fox are a lot less than
the combined revenues of News Corp. Ltd. / 21st Century Fox combined.

† [https://www.statista.com/statistics/272469/largest-media-
com...](https://www.statista.com/statistics/272469/largest-media-companies-
worldwide/)

‡ [http://uk.businessinsider.com/these-6-corporations-
control-9...](http://uk.businessinsider.com/these-6-corporations-
control-90-of-the-media-in-america-2012-6)

~~~
WorldMaker
> I think it is especially worrying that content creation and media
> distribution is allowed in the same company. I guess we have AOL Time Warner
> to thank for that precedent?

Anti-Trust law has never figured out how to handle vertical monopolies. Before
AOL Time Warner were RCA, Westinghouse, Sony, etc.

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symlock
> "...had rejected Comcast’s earlier offer partly on concerns the government
> would block the deal."

> "we are pleased to present a new, all-cash proposal that fully addresses the
> Board’s stated concerns with our prior proposal."

Anyone know why else the Comcast's offer last year was rejected? The article
hints at cash vs stock as possibly being another reason.

~~~
craftyguy
If they think it'll be approved now because of the switch to cash (from
stock), then that seems to suggest the advertised reason (government blocking
it) was not really a real reason. Unless they thought the gov. would block it
because it was stock and not cash?

~~~
milcron
They could have more confidence now since the AT&T merger with Time Warner.

~~~
craftyguy
True, since there's an overall government trend towards anti anti-trust.

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aspectmin
I'm curious how Comcast has access to $65B in cash? Do they actually have this
they can pull on, or does some investment firm find a deal like this?

~~~
jonknee
In M&A cash means loans, not equity. If successful they'll probably issue a
lot of bonds, but in the immediate term it would be loans.

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simplify
This is scary. Are there any orgs we can support that are against big merges
like these?

~~~
shp0ngle
I am more for Comcast - Fox merger than Disney - Fox merger personally.

It's scary, but hey, this is America.

~~~
dave5104
Comcast shouldn't be getting anything. Media and the tubes that carry it
should remain separate.

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what_ever
Except that Fox channels on the TV are not part of the Fox being sold.

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dave5104
No, in this case there's no TV part of it. But I'd still consider the film
division as the "media" and the streaming services that can show the films as
the "tubes", both of which Comcast would have ownership over. Comcast
currently has a 30% ownership stake in Hulu, and would pick up another 30%
from 21st Century Fox.

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pooya13
Let's just have one media / telecommunications company and get it over with.
We could call it the big brother.

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txsh
Could it be that Comcast is just trying to increase the price of Fox to stop
Disney from buying it or at least make them pay a lot more for it?

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shmerl
How did the previous court decision go through for AT&T? I really don't get
what's wrong with that judge (besides may be possible corruption). Comcast now
will be using all that as an excuse.

~~~
adventured
The argument is that it's because there wasn't a large amount of overlap in
regards to concentration of a given market position.

Time Warner is a content owner/producer/broadcast networks/etc. primarily.
AT&T is mostly a telecom company.

You can usually get away with extraordinarily large mergers under US anti-
trust law, so long as you're not overly concentrating the ownership of a given
market. AT&T wouldn't be allowed to buy Verizon or T-Mobile for example.

If Apple wants to buy Fox they'd likely be allowed to. If Apple wanted to buy
Google, they'd likely be blocked. Microsoft could buy John Deere or 3M or GM,
they couldn't buy Amazon or Facebook (disregarding market caps for a moment).

~~~
whatshisface
> _If Apple wanted to buy Google, they 'd likely be blocked._

Apple makes almost all of their money from things that Google doesn't make
much money from - if you spun off all of Google's distant second fiddles off,
along with Apple's software wanderings, you'd end up with a central core of
AdWords and the iPhone. They don't compete.

~~~
adventured
The reason Apple wouldn't be allowed to buy Google, is because it would
concetrate Android + Iphone + Google search. So the entire US smartphone OS
market and the search market would all be under control of one company.

Adwords unto itself isn't what would cause the problem. The principle delivery
mechanism for Adwords is: search and Android.

~~~
whatshisface
Google doesn't make nearly as much money from Android as it does AdWords and
Search. Apple isn't in the search market. So, if Alphabet sells Search+AdWords
to Apple, Apple will end up with 99% of Alphabet revenue without merging any
competition at all.

