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Fox chose Disney over Comcast on regulatory, stock fears: filing
[NEW YORK] Rupert Murdoch's Twenty-First Century Fox Inc, which agreed in December to sell most of its assets to Walt Disney Co for US$52.4 billion, had previously rejected a bid from Comcast Corp over concerns about the regulatory risks and its stock value, a regulatory filing on Wednesday showed.
The joint filing by Disney and Fox, which outlines the timeline of their negotiations, offers the most detailed insight yet into Fox's thinking, as it goes head-to-head against Comcast, a US cable operator, in its bid to acquire European pay-TV company Sky plc, in which Fox holds a 39 per cent stake.
Comcast announced in February it was working on a US$31 billion bid that would top Fox's deal for Sky. It has not made a new attempt to bid for the Fox assets after the Disney deal, so investors are keen for information on the hurdles that prevented an agreement between Fox and Comcast.
The filing does not mention Comcast by name, but refers to it as Party B. Another bidder for the Fox assets, US wireless carrier Verizon Communications Inc, is referred to as Party A.
Verizon and Comcast representatives did not immediately respond to requests for comment.
Comcast on Nov 14 offered to acquire most of Fox's assets in an all-stock deal valued at US$34.41 per share, the filings said. Fox ended up announcing an all-stock deal with Disney for US$29.54 per share.
Like Disney, Comcast sought to buy Fox's entertainment networks, movie studios, television production and international assets, the documents show.
In the filing, Disney and Fox said the ongoing antitrust scrutiny of US telecommunications provider AT&T Inc's planned merger with media conglomerate Time Warner Inc heightened concerns about potential regulatory hurdles to Comcast's bid. The US Department of Justice has sued AT&T and Time Warner to thwart their deal, and the case is in court.
The companies added that, unlike Disney, Comcast declined to offer a reverse deal termination fee, which would compensate Fox in the event that regulators stymied a deal. Disney offered a reverse termination fee of US$2.5 billion.
The companies also said that Fox saw Disney's stock as more valuable than Comcast's, based on historic prices, and felt that a deal between Disney and Fox would generate greater long-term value. The Roberts family controls Comcast through a dual-class stock structure.
Comcast's proposal, on the other hand, would reduce the compensation offered to Fox shareholders in the event that asset sales were required to reassure antitrust regulators, increasing the potential risk to Fox shareholders, the filing said.
Verizon's bid was rejected because it offered to acquire Fox at market value, without a meaningful premium, according to the filing.