While offering billions in a bidding war for most of 21st Century Fox’s TV and film assets, both Disney and Comcast are also on the front lines of a battle of words, each trying to position its bid as the one most likely to gain regulatory approval from the government.
Comcast CEO Brian Roberts jumped to capitalize on this month’s judicial ruling approving AT&T’s $85 billion acquisition of Time Warner over the objections of the Trump Department of Justice’s antitrust division. The following day, he offered a $65 billion all-cash deal for Fox and pointed to AT&T-Time Warner as a driver for the bid.
He also said: “We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction.”
Bob Iger, the king of the castle at Disney, scoffed at Robert’s reading of the company’s regulatory prospects on Wednesday as the Mouse House upped its bid from $52.4 billion to $71.3 billion in a roughly equal split of stock and cash.
“It’s simply an apples to oranges comparison to what the Justice Department was considering when considering the AT&T acquisition of Time Warner,” Iger said during a conference call to discuss the new bid. “We have a much better opportunity both in terms of approval and the timing of that approval than Comcast does in this case.”
To be sure, both deals would likely be scrutinized by the Justice Department for different reasons, a person familiar with the department’s antitrust review process told TheWrap.
“I’m not prepared to say which is better positioned,” Georgetown Economics and Law professor Steve Salop told TheWrap. “But I don’t think the fact that the DoJ lost its suit with AT&T-Time Warner means Comcast is clear of regulatory concerns in a vertical merger. Plus, there’s some horizontal overlap, and there’s some overlap in Disney’s deal as well.”
A merger with Disney would be much more of a straight horizontal merger — a content company buying another content company. These mergers typically have more to overcome in terms of anticompetitive concerns. Disney has already expressed its willing to divest some of the assets it would acquire from Fox in order to gain regulatory approval.
Both companies are vying for a portfolio that includes the Fox film and TV studios, U.S. cable networks including FX and regional sports channels, international properties including Sky PLC and Star India as well as Fox’s one-third stake in the streaming service Hulu.
Comcast’s merger would likely be a bit more complicated, experts said. Whereas Disney doesn’t have the infrastructure or the pipes to distribute content on its own, Comcast owns one of the country’s biggest pay TV providers and broadband companies in Xfinity.
Like Salop said, this would make a Comcast-Fox merger a tangled combination of a horizontal and a vertical merger.
Comcast, emboldened by the AT&T-Time Warner ruling, believes its chances of gaining regulatory approval have improved. But in his written opinion on that case, U.S. District Judge Richard Leon said: “The temptation by some to view this decision as being something more than a resolution of this specific case should be resisted by one and all.”
“We agree with Disney that the additional hurdles facing Comcast — a company that controls 40 percent of the broadband market, in addition to its video footprint and content holdings — will at the very least lead to a longer regulatory review of the deal,” analysts at MoffetNathanson said in a note on Wednesday.
“Don’t forget that in the AT&T-Time Warner case, the DoJ failed to bring up the issue of broadband ownership and zero-rated content.”
14 Billion-Dollar Acquisitions Before AT&T-Time Warner (Photos)
Think $85 billion is a lot of cash? Take a tour through the lurid amounts of money dropped on American media and content machines over the years.
1999: Disney Buys ABC The alliance is such a potent brand that it's hard to imagine them as solo entities, but the $19.5 billion sale gave the Disney company an iconic TV brand to call its own.
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1999: Clear Channel buys AMFM Inc The radio giant paid $20.6 billion for its rival AMFM, their 830 radio stations, 425,000 billboards and 19 TV stations per Forbes.
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1999: Viacom Buys CBS Fifteen years ago, the media giant acquired the TV network for $34.1 billion. While the companies would split in 2006, always remember -- history repeats itself.
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2000: Time Warner and AOL Merge It's often referred to as one of the most disastrous mergers in history. The $186.2 billion price tag seemed visionary at the time, but quickly devolved into a corporate culture way... and the of the dot-com collapse.
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2006: Disney Buys Pixar In the first of a series of key moves from Disney CEO Bob Iger -- ones that would ensure long-term health and eventually see the company take record-breaking market share -- Steve Jobs was convinced to entrust the animation studio to them for a reported $7.4 billion.
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2009: Disney Buys Marvel Iger's $4 billion purchase of the comic book studio changed the industry, secured Robert Downey Jr. as the highest paid actor in Hollywood and made a new constellation of stars and film franchises.
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2012: Disney Buys Lucasfilm Bob Iger's hat trick was completed with a major coup in landing the "Star Wars" universe for $4 billion, which resulted in the No. 3 all-time top grossing film, "Star Wars: The Force Awakens."
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2013: Comcast Buys Remaining Stake in NBC After purchasing a majority stake in 2011 for $30 billion, Comcast paid another $16.7 billion to wholly own the TV brand, film studio Universal and its California and Florida theme parks.
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2013: Yahoo Buys Tumblr It's a relatively small price for a media acquisition, but spend-happy Yahoo CEO Marissa Mayer raised a lot of eyebrows by paying $1 billion for the blogging platform Tumblr.
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2014: Facebook Buys WhatApp While this is a straight-up tech acquisition, it's interesting to note that Facebook paid a staggering $22 billion for the European-based WhatsApp, a mobile application that lets users text for free over WiFi, to bolster their own messaging app. The company has repeatedly said it doesn't care to acquire content engines, but this signals a strong urge to level competition if they ever change their minds.
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2015: Activision Blizzard Buys King Mobile The video game company literally spent $5.9 billion on fun and games. Mobile game company King counts the most successful app of all time, Candy Crush, and legacy social games like Bubble Witch in its stable. Now Activision gets to develop properties like a just-sold CBS game show based on Candy Crush.
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2016: Comcast Buys Dreamworks After years of trying to offload his baby, Jeffrey Katzenberg fetched $3.8 billion for DWA and its respective franchises, like "Kung Fu Panda."
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2015: Dalian Wanda Buys Legendary Entertainment A production company fetching $3.5 billion in a sale was not just jaw-dropping, it was an airhorn that the Chinese invasion into Hollywood had begun. It's also currently the benchmark for what many call inflated valuation... but Wanda's pockets are as deep as their patience is long.
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2016: Verizon Buys Yahoo In a major deal that’s yet to formally close, Verizon is ponying up $4.83 billion for Yahoo’s core business, which includes advertising, content, search and mobile division.
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From Disney-ABC to Wanda and Legendary, a look back at major media deals with staggering price tags
Think $85 billion is a lot of cash? Take a tour through the lurid amounts of money dropped on American media and content machines over the years.