Disney/FOX Acquisition Thread

[Paulio]

Seems like Comcast and Disney are looking for a split asset if both companies agree on to something.

 

[zg44]

Hard to see though why Disney and Comcast would share when they both want the most valuable parts of the assets. Take that 30% of Hulu for example, both Disney and Comcast need that 30% to combine with each's 30% to control 60% of Hulu (which allows them to treat it like a subsidiary). 21st Century Fox's movie rights over X-Men/FF/Avatar/Aliens/etc. would also be coveted by both (Disney owns Marvel/Pandora while Comcast would need those live-action franchises since that's Universal's weakness). Same applies to the 39% of Sky and Star India that Fox owns (neither Disney nor Comcast have large foreign divisions outside of theme parks).

This sounds like more a bidding war than anything else. The one problem for Comcast is that the Trump Administration lawsuit over AT&T/TimeWarner may make it easier for Disney to convince Fox that they won't have any legal problems completing the purchase while Comcast may have more legal issues.

 

[quinnmac000]

Of note,

WSJ broke the story about Comcast still wanting assets. WSJ is owned by Fox and the Murdochs. Just pointing out that point of interest as if Fox may want to sell more to Comcast than Disney.

 

[Paulio]

Hard to see though why Disney and Comcast would share when they both want the most valuable parts of the assets. Take that 30% of Hulu for example, both Disney and Comcast need that 30% to combine with each's 30% to control 60% of Hulu (which allows them to treat it like a subsidiary). 21st Century Fox's movie rights over X-Men/FF/Avatar/Aliens/etc. would also be coveted by both (Disney owns Marvel while Comcast would need those live-action franchises since that's Universal's weakness). Same applies to the 39% of Sky and Star India that Fox owns (neither Disney nor Comcast have large foreign divisions outside of theme parks).

This sounds like more a bidding war than anything else. The one problem for Comcast is that the Trump Administration lawsuit over AT&T/TimeWarner may make it easier for Disney to convince Fox that they won't have any legal problems completing the purchase while Comcast may have more legal issues.

All Disney/Comcast want is Fox's movie and TV cable and broadcast satellite entertainment assets and as noted before, it would not include the Fox Broadcasting Company, Fox News Television Stations, and Fox Sports (Disney owns ABC while Comcast owns NBC, and both networks also have news and sports divisions) AT&T-Time Warner merger is a different game though, since such merge would increase media holdings, in concert with AT&T's ownership of television and internet providers, it means everything that Time Warner has, not just the entertainment assets.

 

[zg44]

All Disney/Comcast want is Fox's movie and TV cable and broadcast satellite entertainment assets and as noted before, it would not include the Fox Broadcasting Company, Fox News Television Stations, and Fox Sports (Disney owns ABC while Comcast owns NBC, and both networks also have news and sports divisions) AT&T-Time Warner merger is a different game though, since such merge would increase media holdings, in concert with AT&T's ownership of television and internet providers, it means everything that Time Warner has, not just the entertainment assets.

What I meant though is that both Disney and Comcast need/want all of the assets for sale (30% of Hulu, 39% of Sky, Star India, 21st Century Fox TV/Movie studio, Fox Animation/Blue Sky studio, FX/National Geographic cable networks).

As far as AT&T/TimeWarner goes, the main holdup for that lawsuit is AT&T buying Turner cable networks while owning DirecTV/U-verse with 25 million paytv subscribers. The parallel here would be Comcast getting FX/National Geographic to add to USA/MSNBC/Bravo/etc. while also owning 22 million paytv subscribers.

Of note,

WSJ broke the story about Comcast still wanting assets. WSJ is owned by Fox and the Murdochs. Just pointing out that point of interest as if Fox may want to sell more to Comcast than Disney.

The Murdochs are definitely doing their part to drum up interest in this sale; putting out front page WSJ articles on interest in the Fox assets will help drive a bidding war between Disney and Comcast (and maybe Verizon or others) if they see one bidder closing in on a deal.

 

[Nick]

Of note,

WSJ broke the story about Comcast still wanting assets. WSJ is owned by Fox and the Murdochs. Just pointing out that point of interest as if Fox may want to sell more to Comcast than Disney.

That doesn’t strike me as them wanting to sell more to Comcast as much as trying to reel them back in since rumors have been pointing to Disney lately.

 

[zg44]

Murdochs are definitely putting these leaks out as news through WSJ to keep both Disney and Comcast actively engaged.

Realistically though, both will get a fair shot at bidding. Knowing how the Murdochs operate, they're most interested in getting the highest price; I doubt they have a preferred bidder between Comcast and Disney given that both have strong competitive positions.

The Murdochs aren't like Steve Jobs (Pixar), George Lucas (Lucasfilm), or Jeff Katzenberg (DreamWorks), who all had preferred outcomes for their businesses.

 

[zg44]

"21st Century Fox Inc., the global film and TV company controlled by the Murdoch family, would prefer to sell some assets to Walt Disney Co. because it’s a better strategic fit and presents fewer regulatory hurdles, people familiar with the matter said."
Fox Favors Disney as Buyer for Studio, Media Assets - Bloomberg

It makes sense that they're leaning towards Disney on both accounts: 1) Trump administration has been completely unpredictable on media mergers with the unexpected lawsuit against the AT&T-TimeWarner merger (means a lawsuit against a Comcast purchase of Fox's entertainment assets is a non-zero probability), and 2) Disney owns Marvel (Fox's X-Men/FF rights fit in there), as well as Lucasfilm (Fox still has distribution rights to the original Star Wars movie) and Pandora/Avatar.

So that's a sensible starting point for Fox to be leaning towards Disney.

But money always talks and we're talking about a purchase that could range anywhere from $25 billion to $50 billion depending on the assets in play. If Comcast offers several billion dollars more than Disney, Fox would probably go with Comcast's bid.

 

[Paulio]

"21st Century Fox Inc., the global film and TV company controlled by the Murdoch family, would prefer to sell some assets to Walt Disney Co. because it’s a better strategic fit and presents fewer regulatory hurdles, people familiar with the matter said."
Fox Favors Disney as Buyer for Studio, Media Assets - Bloomberg

It makes sense that they're leaning towards Disney on both accounts: 1) Trump administration has been completely unpredictable on media mergers with the unexpected lawsuit against the AT&T-TimeWarner merger (means a lawsuit against a Comcast purchase of Fox's entertainment assets is a non-zero probability), and 2) Disney owns Marvel (Fox's X-Men/FF rights fit in there), as well as Lucasfilm (Fox still has distribution rights to the original Star Wars movie) and Pandora/Avatar.

So that's a sensible starting point for Fox to be leaning towards Disney.

But money always talks and we're talking about a purchase that could range anywhere from $25 billion to $50 billion depending on the assets in play. If Comcast offers several billion dollars more than Disney, Fox would probably go with Comcast's bid.

Wow, Disney owning this much really actually annoys me and would make grow big and bully others to force them in their favor. Anyways, I really hope Comcast offers billion dollars more than what Disney has, considering it has more shares than Disney itself.

 

[Nick]

All I can think about is finally getting a good Fantastic Four movie if this goes to Disney.

 

[AlexanderMBush]

All I can think about is finally getting a good Fantastic Four movie if this goes to Disney.

All I can think of is a possible X-Men v. Avengers movie. That could be huge.

 

[zg44]

Wow, Disney owning this much really actually annoys me and would make grow big and bully others to force them in their favor. Anyways, I really hope Comcast offers billion dollars more than what Disney has, considering it has more shares than Disney itself.

Yeah, in a general sense, if Disney does acquire these assets, then it would probably be so dominant in terms of major franchises that it's difficult to see how other studios breakthrough without developing other new franchises.

The purchase price won't be in dollars but rather in stock. It'd be $25-50 billion worth of Disney or Comcast stock (because the stock exchanged wouldn't be taxed like dollars would).

 

[Nick]

All I can think of is a possible X-Men v. Avengers movie. That could be huge.

It would never be the current Avenger era going against X-men though. Not only is Jackman pretty much done as Wolverine, but many of the big name Avengers are likely to exit the current MCU after Avengers 4.

 

[AlexanderMBush]

It would never be the current Avenger era going against X-men though. Not only is Jackman pretty much done as Wolverine, but many of the big name Avengers are likely to exit the current MCU after Avengers 4.

And that while I do get what you say, and do agree that it would never be the current Avengers team, I do think there is potential with it, regardless if we may see certain former avengers go away.

 

[zg44]

Most likely the X-Men would end up rebooted and integrated into the Avengers in a similar way to Spiderman or Guardians of the Galaxy.

There'd be an MCU X-Men followed by a sequel and then they'd show up in Avengers 5 or 6 depending on how their timeline works.

They'd use some kind of supervillain like Galactus to bring the X-Men back into the Avengers like how Thanos and the Infinity Gems brought the Guardians into Avengers.

 

[quinnmac000]

"21st Century Fox Inc., the global film and TV company controlled by the Murdoch family, would prefer to sell some assets to Walt Disney Co. because it’s a better strategic fit and presents fewer regulatory hurdles, people familiar with the matter said."
Fox Favors Disney as Buyer for Studio, Media Assets - Bloomberg

It makes sense that they're leaning towards Disney on both accounts: 1) Trump administration has been completely unpredictable on media mergers with the unexpected lawsuit against the AT&T-TimeWarner merger (means a lawsuit against a Comcast purchase of Fox's entertainment assets is a non-zero probability), and 2) Disney owns Marvel (Fox's X-Men/FF rights fit in there), as well as Lucasfilm (Fox still has distribution rights to the original Star Wars movie) and Pandora/Avatar.

So that's a sensible starting point for Fox to be leaning towards Disney.

But money always talks and we're talking about a purchase that could range anywhere from $25 billion to $50 billion depending on the assets in play. If Comcast offers several billion dollars more than Disney, Fox would probably go with Comcast's bid.

Biggest part of why Fox wants Disney...

A deal could open the door for James Murdoch, Fox’s chief executive officer, to join Disney. The Murdochs aim to make a decision by the end of the year, the people said. Whether they pursue a transaction will depend on the price and structure, they said.

The Fox assets in play are worth almost $50 billion, according to Alan Gould, an analyst at Rosenblatt Securities Inc., and could translate into a 25 percent stake in Disney if they agree to a stock deal. That would potentially reduce the tax liability for Fox shareholders, including the Murdochs.

Comcast can buy with cash on hand but Disney giving stock would give Murdoch a much larger advantage monetarily with stocks.

 

[zg44]

Biggest part of why Fox wants Disney...



Comcast can buy with cash on hand but Disney giving stock would give Murdoch a much larger advantage monetarily with stocks.

Both can offer a tax-deferred merger using stock (Comcast's stock is worth $190 billion market cap, Disney's is worth $170 billion market cap). Both are very low in total debt as well in case they need to add any cash (Comcast has $60 billion in total debt, Disney has $30 billion in total debt).

Either can offer any mix of stock or cash up to $50 billion without breaking a sweat.

As a comparison, AT&T with a market cap of $230 billion already has $120 billion in total debt but would take on an additional $66 billion in debt if/when it accomplishes its merger with TimeWarner (they offered $86 billion in cash and stock for TimeWarner).

That should put into perspective just how strong Comcast and Disney balance sheets are compared to a much more heavily indebted telecom like AT&T.

It really just comes down to who offers more; i.e. $55 billion in Comcast stock would trump $50 billion in Disney stock.

 

[quinnmac000]

Both can offer a tax-deferred merger using stock (Comcast's stock is worth $190 billion market cap, Disney's is worth $170 billion market cap). Both are very low in total debt as well in case they need to add any cash (Comcast has $60 billion in total debt, Disney has $30 billion in total debt).

Either can offer any mix of stock or cash up to $50 billion without breaking a sweat.

As a comparison, AT&T with a market cap of $230 billion already has $120 billion in total debt but would take on an additional $66 billion in debt if/when it accomplishes its merger with TimeWarner (they offered $86 billion in cash and stock for TimeWarner).

That should put into perspective just how strong Comcast and Disney balance sheets are compared to a much more heavily indebted telecom like AT&T.

It really just comes down to who offers more; i.e. $55 billion in Comcast stock would trump $50 billion in Disney stock.

I'm thinking more so in terms of ownership, I don't see Brian Roberts giving Murdoch a seat on the board whereas I see Disney easily selling out to give part of ownership to the Murdoch family. These giving them stronger influence on Disney's operations.

 

[zg44]

I'm thinking more so in terms of ownership, I don't see Brian Roberts giving Murdoch a seat on the board whereas I see Disney easily selling out to give part of ownership to the Murdoch family. These giving them stronger influence on Disney's operations.

My read of the situation is that based on estate planning for Rupert Murdoch, they may try to just pass the Disney (or Comcast) shares that they receive straight to Fox investors and the Murdoch Family Trust. That's the main reason why they want stock (not cash) in this sale.

So realistically, only around 16-17% of the Comcast or Disney stake that Fox receives would actually go to the Murdoch Family Trust, since the Murdoch Family Trust controls 300 million of Fox's 1.8 billion outstanding shares. The other 83-84% of the Comcast or Disney stake would go to Fox's other investors.

Basically, the Murdochs would get 4% of Disney's overall stock or 3.5% of Comcast's overall stock. Not really a threat to control either even with James or Lachlan Murdoch on the board.

Brian Roberts controls 33-35% of Comcast stock with his supervoting shares.

 

[Paulio]

If this deal goes through, my opinion that it would have negative consequences for Comcast as well as the Fox properties and entertainment industry as a whole.

1) It would be twice in the row that Comcast's Universal theme parks would have to pay for a property owned by the House of Mouse (Marvel Super Hero Island at Islands of Adventure, Marvel's Spider-Man at USJ, and The Simpsons Land at USF and USH).

2) You won't likely see CBMs like Deadpool and Logan made under Disney anymore due to being raunchy, violent R-rated content. I'm not saying Disney making R-rated movies is not plausible, but unlike other major film studios, Disney hasn't released an R-rating movie since 2011, after selling off Miramax and reduced Touchstone Pictures of that of a production company. People might point out Marvel's Netflix shows, but Marvel Television produces them, not Marvel Studios. It's well-known fact that Marvel Television and Marvel Studios don't get along well despite being under the same roof and Marvel Television subcontracted Netflix to make the shows (that's why MCU and Netflix's Marvel shows made no mention of each other). Disney's MCU nowadays are aimed to be family-friendly with generic and oversaturated plots on the cinematic screen with the intent of selling the merchandises families and kids want. It's on Disney's DNA like it has always in the past 90 years.

3) American Horror Story, a Fox's property, couldn't be used for HHN anymore unless it's shown to be grandfathered in.

4) Universal theme parks would have to license more properties, especially for the 3rd undeveloped theme park in Orlando.

5) It would make Disney far more powerful and too big, giving them more leverage over the entertainment industry (e.g. by threatening independent-film studios and major studios which doesn't get the chance), given its recent behavior towards local theaters for the Last Jedi and the Los Angeles Times which exposes Disney's questionable or immoral leverage over the city of Anaheim (that's why Disney blocked LA Times from screening the movie in attempt to silence free press).

6) Much of Fox's properties such as Predator, Alien, Die Hard, Family Guy, Apes, The Simpsons, 24, King of the Hill, American Horror Story, American Crime Story, Bob's Burger, Archer, etc, are not suitable for Disney theme parks due to its mature and adult-oriented content. Disney parks are ALWAYS supposed to be family-friendly, that's why they don't have a HHN similiar to Universal's HHN and Knott's Scary Farm.
​

But suppose we switch it around and see what happens if Comcast actually succeeds instead.

1) It would simplify the theme park rights for The Simpsons

2) It would continue to allow Fox to make R-rated X-Men movies for possibly unlimited time should Comcast acquires the character rights without restrictions. It would put Universal back on the comic book movie trend since 2008.

3) The distribution rights to Star Wars — Episode 4: A New Hope will be held by Comcast. This could be seen as some trolling to Disney and hurt the Mouse's chances to get all Star Wars movies under its roof. Can you imagine the pain of negotiating when the anniversary is coming up and the like?

4) It gives Universal Studios many of the valuable Fox's IP to develop movies, more TV valuable shows (that is currently lacks), and using them for the theme parks and their expansions without having to obtain so much properties from 3rd party companies.

5) Comcast would likely to have Fox and Universal stay seperate and Fox would be part of NBCUniversal Filmed Entertainment Group. Maye a joint Universal-Fox intro in the movies would be good if Universal gets a chance to distribute their movies.

6) Comcast would keep the directors in place since Fox Searchlight gives them a chance who were declined so many times, even Disney.​

As much as I love Disney, if given the only choice between Disney and Comcast (as crap as they are), I rather Comcast get it instead of the big bloated asset Disney. It would make the competition between Comcast and Disney much innovative, after how the success of Universal's Harry Potter turned out, which forces Disney to develop innovative rides like Avatar and the upcoming Star Wars Land. Disney being too big by acquiring so many popular brands is just too much and won't be good for the entertainment industry in the long run.