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The pursuit of Fox is over for Brian Roberts. His torment is not. On Thursday, the head honcho at Comcast decided to throw in the towel for the Fox assets he had been chasing. Rupert Murdoch never really favoured Comcast’s entreaties anyway. Still, the bidding war that Mr Roberts created forced Disney to raise its purchase price by 36 per cent. Disney’s bid values the Fox entertainment assets at $71bn. This is worth around $3bn in additional gross value to the Murdochs.
Comcast has decided to turn its attention to Sky. It is also fighting with Disney over the satellite and entertainment group but, for now, seems to have the edge with a bid of £14.75 per share. This is above Disney’s last bid and around twice the price that the bids started at. But Disney is about to acquire Fox assets — including a 39 per cent stake in Sky. Mr Roberts is not done tangling with Disney just yet.
One approach suggested is that Disney simply stands down and concedes Sky to Comcast (technically, Fox has been bidding for Sky). The Fox television and film parts are more crucial to Disney’s ambition to create a streaming rival to Netflix. The cost to win Sky, while also buying Fox, is excessive. The last £14.75 bid is already 37 per cent higher than the price was in December.
However, that still leaves the question of whether Disney should sell or swap that 39 per cent stake in Sky so that Comcast can own Sky outright. The stub position had always been awkward for Fox and will be so now for Disney. Research firm MoffettNathanson notes that the Sky stake is tax inefficient since it cannot be consolidated for financial reporting purposes.
Comcast would undoubtedly like to own Sky outright. It could negotiate with Disney to swap assets such as its own stake in US streaming service Hulu for the 39 per cent stub, if Disney is willing. Mr Roberts might finally have some leverage over Disney. He should use it.
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