Decision time for Comcast over Fox bid

NEW YORK • It is decision time for Comcast Corp, which faces one of the biggest moments in the cable giant's 55-year-old history.

After Walt Disney Co raised its offer for 21st Century Fox's entertainment assets to US$71.3 billion (S$96.8 billion), Comcast chief executive officer Brian Roberts is now mulling over how to respond to the escalating bidding war.

Wall Street is girding for Comcast to counterbid with something around US$41 or US$42 a share in cash. But that would saddle the company with debt and threaten its credit rating.

Disney may have another edge: It is close to winning antitrust approval for its offer, according to a person familiar with the matter. Comcast may not be able to offer Fox investors the same assurances.

It all comes down to how badly Mr Roberts wants the Fox properties, a sprawling array of entertainment assets ranging from The Simpsons to X-Men.

The 58-year-old CEO could be on the verge of another gambit on the order of his deal to acquire NBCUniversal in 2011 and create a media conglomerate - one that owns both a cable infrastructure and the TV programming itself.

But investors don't share Comcast's enthusiasm. The shares have fallen about 20 per cent in the months leading up to the company making a US$65 billion bid last week. Now it is contemplating an offer that may have to approach - or even surpass - US$75 billion.

Comcast has sought to break up a deal between Fox and Disney that was hammered out in December. The two sides initially agreed to a price of about US$28 a share, and then Comcast countered with US$35 last week.

Rather than pursuing negotiations with Comcast, Fox reached a fresh agreement with Disney on Wednesday. The US$38-a-share price is about US$10 a share higher than what Disney laid out in December. It also lets investors collect half the sum in cash, rather than the all-stock terms offered in the original proposal.

The Disney-Comcast contest will determine who controls much of Mr Rupert Murdoch's empire, including Fox's movie and TV studios, television networks such as FX, and multichannel providers like Star India and Sky.

In any case, Comcast is not likely to go away quietly.

Comcast's current US$65 billion cash offer for Fox - along with the potential Sky deal - was already expected to push its debt load to US$170 billion, according to Moody's Investors Service.

That leaves Mr Roberts with a tough decision, said Bloomberg Intelligence analyst Paul Sweeney.

"The ball is now in Brian Roberts' court," he said.

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A version of this article appeared in the print edition of The Straits Times on June 22, 2018, with the headline 'Decision time for Comcast over Fox bid'. Print Edition | Subscribe