Comcast Gets Into Disney’s M&A Kitchen
It looks like Comcast is getting ready to make a power play for Fox and upend Disney’s dream of controlling the video content universe. According to Reuters Comcast has made arrangements for a $60B (with a B!) bridge loan which could be used to purchase Fox in an all-cash deal. This proposal could be significantly more attractive for Fox shareholders than Disney’s current offer of $52B in stock. On the surface this seems to be an example of one big fish muscling out another big fish to eat a smaller fish in their same pond. However there’s much more going on here than meets the eye.
For starters Comcast insiders have confirmed that they’ll only pull the trigger on a Fox offer if the pending AT&T-Time Warner merger receives DOJ approval. Court hearings in that case wrapped up last week and a ruling is expected by June. Some analysts are wondering if Comcast intentionally leaked the story about their interest in Fox as a way to sway that ruling – because if Comcast and Fox were to tie the knot it would make a potential monopoly by AT&T and Time Warner less of a threat, thus thwarting the DOJ’s case for either aquistion.
Comcast might also be interested in Fox’s content to complement its distribution-heavy footprint. You can really see how this lays out in the graphic below. I’m guessing Disney is very nervous about the possibility of Comcast pulling this deal off. Because if AT&T-Time Warner and Comcast-Fox pair up that doesn’t leave any other meaningful content M&A options for the Mouse to jump on.
Can you imagine the white knuckles going on in a few board rooms right now?