Comcast Wants To Buy A Large Share Of 21st Century Fox For $65 Billion
Comcast Corporation (NASDAQ:CMCSA) is reportedly interested in purchasing a large portion of assets belonging to Twenty-First Century Fox Inc Class A (NASDAQ:FOXA) at a hefty price of $65 billion.
The company has announced on Wednesday that it is willing to pay as much as $65 billion in order to acquire most of the businesses owned by Fox, particularly its film and TV assets. The announcement means the company is planning to battle it out with Walt Disney Co (NYSE:DIS). Fox is owned by Rupert Murdoch and is one of the biggest media companies in the U.S.
Comcast is currently the largest provider of broadband and cable services in the U.S. and its bid for Murdoch’s company comes just one day after a merger between Time Warner Inc (NYSE:TWX) and AT&T Inc. (NYSE:T) was approved by a Federal Judge. Comcast executives had reportedly been waiting for a ruling on the merger before announcing their bid for Fox.
The move highlights the increasing competition between traditional media companies as they face pressure from Silicon Valley giants such as Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX). The content streaming companies have not only been stealing audiences, they have also been poaching Hollywood talent for their original content.
Comcast’s bid outshines Disney’s bid
Disney offered a $52.4 billion bid to acquire Fox’s TV and film assets and the fact that Comcast is now offering a better deal makes it even more interesting. The company that will win the bid will be in a better position to weather the effects of cord cutting. Most people, especially the millennial generation are opting to use streaming services like Netflix rather than paying for traditional cable, thus threatening the profitability of cable companies.
The winner of the bid will also get to scale up its production through Fox since the firm will acquire the Fox movie studio which is responsible for major movie franchises such as “X-men” and “Avatar.” The sale will also include cable channels such as “National Geographic” and “FX” as well as regional sports networks owned by Fox.
The winning bid will also acquire Fox’s stake in the Hulu streaming platform which boasts of more than 20 million subscribers. Disney and Comcast also have stake in Hulu and the company with the winning bid will get control of the majority stake.
Comcast wants to acquire Fox’s stake in the streaming platform but sources familiar with the dealings have revealed that it will most likely be required to part with the stake in order to meet regulatory requirements. Fox is also planning to let go of its stake in European Broadcasting giant Sky.
An acquisition of the stake in Sky by Disney or Comcast would be strategic because it would allow the winner of the bid to expand its footprint. Mike Cavanagh the CFO of Comcast told investors On Wednesday that his company might even end up sharing the stake in Sky with Disney. Fox is planning to keep some of its properties but it plans on divesting a large share of its assets.