Comcast has reportedly lined up financing for a $60 billion all-cash offer for assets owned by 21st Century Fox, topping Disney’s $52.4 billion all-stock offer.
Judge Richard Leon said, let there be deals. Just how wild the deal making will get will become clear quickly, when Comcast CMCSA 0.18% finally makes its bid for assets owned by 21st Century Fox . FOX 0.32%
On Tuesday a federal judge approved AT&T ’s roughly $80 billion acquisition of Time Warner . That decision lifted a legal cloud that had been hanging over other media deals, including a possible bidding war for Fox’s film and TV studios.
Comcast’s bid for 21st Century Fox’s much-coveted assets could come as early as Wednesday. It has reportedly lined up financing for a $60 billion all-cash offer, topping Disney ’s DIS 0.09% $52.4 billion all-stock offer. But that doesn’t mean Comcast will bid $60 billion.
Since last December, when Disney reached a deal with Fox, Disney shares have declined from around $110 to $104. So Comcast may decide it can offer less, and its own grumpy shareholders may be a check on its ambitions.
The AT&T-Time Warner ruling could also give Comcast reason to start lower. Since Judge Leon didn’t impose so much as a single constraint on the merger, the regulatory concerns that previously hung over a Fox deal will be looking far less worrisome.
But whatever Comcast offers, Disney is sure to counterbid. That will in turn setoff bidding for Sky, the British satellite-TV company, which is 39% owned by Fox. Fox has bid £10.75 per share for the remaining 61%, with the intention to then sell it to Disney along with the other Fox assets. But Comcast has also bid £12.50 per share, or $31 billion, for Sky.
Fox won’t up its own bid for Sky until Disney ups its bid for Fox. But then again, if Fox decides to sell to Comcast, Fox may not need to up its bid at all.
If a bidding war takes off, and it could given Fox’s strategic importance and the capacity of both companies to stretch their balance sheets, bids could reach up to $80 billion, according to John Janedis, a media analyst at Jefferies LLC. That is the maximum value at which the companies could maintain their investment-grade credit ratings. 21st Century Fox and The Wall Street Journal-parent News Corp share common ownership.
Animal spirits being what they are, the frenzy may make onlookers rush to buy or sell, too. That includes not only the legacy media companies like CBS, but also the tech giants who threaten them. Acquiring content conglomerates would surely have been off the table for Silicon Valley if the merger had been blocked. But a ruling blessing vertical integration may now make that hard to fight.
Will Apple AAPL -1.03% or Amazon AMZN -0.46% use their pricey stock to make an offer-she-can’t-refuse for CBS before Verizon weighs in? Shari Redstone, president of National Amusements, CBS’s controlling shareholder, would probably prefer to complete a merger with Viacom before selling both.
But if the price is right, she may not wait.