With Mega-Merger Path Clear, Who Wants 21st Century Fox More?

Brian L. Roberts speaks during the Fortune Global Forum 2-November 3, 2015-Getty-H 2018
Justin Sullivan/Getty Images

All eyes are now on Comcast as it gets ready to offer a "superior" bid to Disney's $52.4 billion offer.

Now that a judge has cleared the way for AT&T to purchase Time Warner for $85.4 billion, there are two issues, says Richard Greenfield of BTIG, perhaps the most prolific Wall Street analyst on the topic who (jokingly?) says he has written on it 300 times thus far:

1. "Who wants 21st Century Fox more? Because there's going to be a battle royale for it, and for Sky. Rupert Murdoch is agnostic. He'll take the highest offer," Greenfield tells The Hollywood Reporter.

2. "Comcast views this as, 'we will not lose.' They have a 30-year view. CEO Brian Roberts doesn't care how low his stock goes if it means outbidding Disney. He's an owner, not an employee."

Disney, of course, has already agreed to pay Fox $52.4 billion for most of Fox, including the film and TV studio, some TV stations and its 39 percent stake in Sky, the European pay-TV service.

Comcast has already muddied the waters by offering roughly $31 billion for all of Sky, and it likely will further disrupt Disney's plans by upping its bid for those same Fox assets.

Wall Street, in fact, expects a bid any moment, as Comcast said it was waiting to hear what a judge said about AT&T-Time Warner. What Judge Richard Leon said is being interpreted as an all-clear sign for mega-mergers in the era of President Donald Trump who, early in the process, objected to the merger.

The judge didn't even place restrictions when giving his blessing, as some were expecting. Specifically, he didn't say that AT&T needs to first divest itself of DirecTV or that Time Warner needs to shed CNN.

After Tuesday's ruling, basically every stock in the media-entertainment sector traded higher on the expectation many would be receiving bids, with Fox up 6 percent. The exceptions were Comcast and Disney, both slightly down since they are bidders, not receivers of bids.

"The deal paved the way for you cats to get paid today," said RBC Capital Markets analyst Steven Cahall, though he notes that the Department of Justice has roughly six days to appeal.

"We see this as about as clean a ruling for media as it could be, and could pave the way for years of additional mergers and probable convergence between content, distribution, telco and tech," says Cahall. "We think content is likely to be the belle at the ball."

Wall Street figures that others perceived as being on the auction block are MGM, Sony Pictures, Lionsgate, AMC Networks, Discovery Communications and even CBS and Viacom, but those latter two are engaged in a dispute that has CBS suing controlling entity National Amusements so that it can't force a Viacom-CBS merger.

There is one other issue that Greenfield deems significant: AT&T Watch, an upcoming streaming service the telecom giant says it would offer free to its subscribers should the merger with Time Warner be approved.

"They're going to launch a bundle-buster. We speculate it will include content from Turner, Discovery, Viacom and AMC," says Greenfield. "It's going to be a big topic. We're highly confident they're going to do this, just like T-Mobile offers Netflix and Sprint offers Hulu."