The question of who will win in the bidding war over Fox won’t be answered until Fox’s shareholder meeting later this month, but according to analysts Disney has a clear edge over rival Comcast.
Videos by ComicBook.com
A new report from Deadline indicates that, with a little over three weeks left until Fox’s shareholders will vote on Disney’s massive $71.3 billion cash and stock offer for Fox’s assets, Disney’s offer is not only more lucrative overall but also has tax advantages the Comcast offer simply doesn’t have. This, along with pledged support of the Disney offer by the Murdoch family, is enough to make Disney the likely victor.
While Disney’s advantage doesn’t count Comcast entirely out, Wall Street analysts say that any counter bid from the cable giant would have to be considerably bigger than the $65 billion all-cash offer that kicked off the bidding war last month — and that might not make good business sense long run.
“The issue we see here is that the strategic rationale just doesn’t appear to be there for Comcast to chase,” Cown and Co. media analyst Doug Creutz said. “Management cited geographic diversification and an important reason for the bid. However, if Comcast shareholders desire that type of diversification, they are completely free to go rebalance their portfolio in the open market without paying a big M&A premium.”
With the Department of Justice having approved Disney’s acquisition bid — with the caveat that they will have to sell off Fox’s regional sports networks to avoid ESPN-related monopoly concerns — the way is clear for the deal to be finalized following Fox’s shareholder meeting on July 27. However, even if Comcast is able to scramble a new, bigger offer for Fox to consider, analysts are already banking on one outcome of the entire acquisition drama. BTIG media analyst Rich Greenfield says that no matter who the victor, Disney and Comcast will walk away from Fox as “mortal enemies”.
“The source of rising tensions is clear, as Comcast has already forced Disney to pay 35-percent more for Fox than it had originally agreed upon and caused Disney to stop its share repurchase program,” Greenfield wrote.
He goes on to note that this is problematic for Disney specifically because of the company’s heavy investment in its Disney-branded streaming service that is planned for 2019. With Disney pushing to invest in their service at the cost of revenues it previously received from distributors such as Netflix, any additional increase in what Disney will have to pay for Fox could be problematic for the House of Mouse — a problem Comcast could play to its advantage.
“If we were in Comcast’s shoes, we would literally push Disney to their breaking point to see if we could make them blink and give up,” he wrote.
But Comcast may not be in a position to do so. Comcast is reportedly “scrambling” to line up the funding needed to push Disney’s bid out of contention and it seems like Fox might not really be interested even if Comcast manages to pull it off. TCI Fund Management, a major shareholder in 21st Century Fox, is reportedly urging Fox chairman Rupert Murdoch to grant Comcast more time to come back with a counter-offer, but thus far that has not happened.
Disney also has the numerical advantage when it comes to votes.
“Since we expect the Murdoch family to vote its 17-percent of shares in favor of the Disney bid, and a 51-percent simple majority is all that is needed to win, Disney only needs about 40-percent of non-Murdoch shareholders to win,” Needham & Co.’s Laura Martin said. “This compares with requiring about 50-percent of non-Murdoch shareholders for Comcast to win.”
If the odds really are in Disney’s favor and it gets hold of 21st Century Fox’s assets, it will acquire rights to the last major Marvel Entertainment properties: the X-Men movie franchise, and the Fantastic Four movie franchise. With those back at Disney, Marvel Studios would be able to launch all sorts of new storylines and franchises, under a much wider tent of the Marvel Cinematic Universe. It’s already been rumored that next year’s X-Men: Dark Phoenix could be the end of Fox’s X-Men movie saga, before the MCU reboot. Given where both the MCU and X-Men movie franchises are right now, getting the Fox and Disney deal done sooner rather than later would be a serious benefit to Marvel Studios — and its fans.
We will keep you up to date on the Disney/Fox deal.
