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.”