Comcast Ends Pursuit of Fox, Bidding War With Disney
The cable giant will focus on winning European pay TV giant Sky, in which Fox owns a 39 percent stake.
Cable giant Comcast has decided to end its pursuit of large parts of 21st Century Fox and not top a sweetened $71.3 billion cash and stock bid that Walt Disney had unveiled on June 20.
The company said Thursday it would instead focus on its bid for European pay TV giant Sky. It recently submitted a raised $34 billion offer for Sky, topping an increased bid from Fox, which owns a 39 percent stake in 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," the company said early on Thursday.
Added Comcast chairman and CEO Brian Roberts: "I'd like to congratulate [chairman and CEO] Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company."
Comcast had on June 13 unveiled a $65.0 billion offer for the Fox assets that had trumped Disney's original $52.4 billion bid. Disney then shot back with a sweetened $71.3 billion offer for Fox.
The cable giant will now focus its energy on winning the showdown with Fox for European pay TV giant Sky, with some analysts suggesting that Fox and its likely future owner Disney could leave Sky to Comcast and focus on their deal with each other.
"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," Disney CEO Bob Iger said in a statement. "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."
Disney recently gained regulatory approval for its Fox deal. Iger during a recent analyst call had said the company was better placed than Comcast to secure regulatory approval for the deal. "We have a much better opportunity in terms of approval and the timing of that approval than Comcast does in this case," he had argued.
Shareholders of Disney and Fox are set to vote on the mega-deal on July 27.
The Department of Justice's decision to appeal a court ruling on its attempt to stop AT&T's acquisition of Time Warner was seen as potentially complicating Comcast's play for Fox further.
"The DOJ surprised the market last Thursday by appealing District Court Judge Richard Leon's approval of the AT&T acquisition of Time Warner with no conditions," analyst Matthew Harrigan said in a Monday report. "Although we think the D.C. three-judge Circuit Court panel is unlikely to reverse Judge Leon, the DOJ's seeming insistence on preserving legal arguments against 'vertical' acquisitions further complicates Comcast's machinations to devise a winning a bid for the 21st Century Fox entertainment assets. Comcast is instead seemingly focusing on Sky with a new £14.75 per share bid immediately preempting the new £14.00 Fox bid."
In a first reaction to Thursday’s development, Harrigan said: “Disney/Fox would likely make a new Sky bid only after the shareholder votes to approve the Fox assets sale to Disney on July 27.” He added: “Although Sky would be desirable to Disney as a foundation for launching its family branded and ESPN streaming businesses in Europe, we do not regard it as a must have. We are slightly inclined to believe that Comcast will be the winner for Sky at near its current bid price.”
Investors cheered Comcast’s statement on Thursday, with the cable operator’s stock rising more than 3 percent in early trading. It has recently been under pressure amid concerns about an expensive and drawn-out bidding war for the Fox assets. Fox shares were down 1.5 percent in early trading.