Comcast Preparing "Superior" All-Cash Bid for Parts of Fox in Challenge to Disney Deal

Brian L. Roberts speaks during the Fortune Global Forum -November 3, 2015-Getty-H 2018
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The cable giant, which owns NBCUniversal, had in December bowed out of the process.

Comcast Corp. on Wednesday confirmed that it is considering and preparing to make what it called a "superior" all-cash bid for large parts of 21st Century Fox, controlled by the Murdoch family, in a challenge to The Walt Disney Co.'s $52.4 billion deal for the same businesses.

The cable giant, which owns NBCUniversal, had in December bowed out of the bidding process just before Fox accepted the Disney deal, which includes the 20th Century Fox movie and TV studio, all the international pay TV properties including its stake in Sky, as well as a number of other assets. Comcast said it would offer to buy the same assets after the spinoff of what has been dubbed "New Fox."

"Comcast Corporation confirms that it is considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney (which do not include the Fox News Channel, Fox Business Network, Fox Broadcasting Company and certain other assets)," it said Wednesday. "Any offer for Fox would be all-cash and at a premium to the value of the current all-share offer from Disney. The structure and terms of any offer by Comcast, including with respect to both the spinoff of 'New Fox' and the regulatory risk provisions and the related termination fee, would be at least as favorable to Fox shareholders as the Disney offer."

Added the cable gaint: "While no final decision has been made, at this point the work to finance the all-cash offer and make the key regulatory filings is well advanced."

Comcast's stock was down nearly 2 percent in early Wednesday trading at $31.88, near its 52-week low of $30.43. Disney's stock was down 1 percent, while Fox shares were up 0.9 percent.

A formal bid by Comcast could lead to a bidding war with Disney. The two industry giants have been facing off on a couple of Fox fronts as of late.

Last month, Comcast formally made a $31 billion bid for European pay TV giant Sky, in which Fox owns a 39 percent stake and of which it has offered to take full ownership. Comcast's offer was higher than Fox's, with bankers and analysts at the time wondering if Fox and/or Disney could counter with a higher offer. Many at the time also started debating whether Comcast would follow up its Sky offer with a bid for the other Fox assets that Disney is buying.

Comcast's bid for the Fox assets back in December was higher at around $60 billion, but Fox went with Disney's offer amid concerns that the Comcast offer didn't include a break-up fee and that a deal with the cable giant could face more anti-trust issues. Analysts have suggested that Comcast could wait for the court decision on AT&T's deal to acquire Time Warner, which is expected next month, to make a final decision on its play for larger parts of Fox.

Comcast's first public comment on its plans for a Fox bid Wednesday seem to have been triggered by the expectation that Fox and Disney would soon unveil details of shareholder votes on their deal, which are widely expected to take place in July. Comcast said it was making its statement "in view of the recent filings with the U.S. Securities and Exchange Commission by The Walt Disney Company and Twenty-First Century Fox Inc. in preparation for their upcoming shareholder meetings to consider the acquisition of Fox by Disney."

Fox and Disney didn't immediately comment. Fox executive co-chairman Lachlan Murdoch said on the company's recent earnings call when asked about a potential Comcast bid: "We are committed to our agreement with Disney and are working through the conditions to bring it to a closing. In addition, our directors, though, of course are aware of their fiduciary duties on behalf of all shareholders."

"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," Comcast said back in December. "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. We have a terrific company with a strong portfolio of businesses and will continue to focus on driving growth, innovating, creating great content, and providing excellent experiences for our customers."

Comcast chairman and CEO Brian Roberts recently emphasized that the company would only bid for assets that would make financial and strategic sense to buy, but the cable giant's stock has been hit by investor fears about increased debt levels and the risks of a bidding war.