Comcast offers $65 billion to snake Fox from Disney

Could we see a bidding war for 21st Century Fox?

Comcast, the nation's largest cable television provider, on Wednesday offered $65 billion in cash to buy 21st Century Fox's film and TV studios, a bid that comes on top of an existing $52.4 billion, all-stock offer by Disney. Fox is home to marquee franchises like X-Men, Deadpool, Kingsmen, and Planet of the Apes; animated films like Ice Age; and TV assets like The Simpsons and edgy network FX.

"Together we'll be a unique leader in entertainment and technology with the resources and capabilities to compete and grow way into the future," Steve Burke, the CEO of Comcast's NBCUniversal arm, said during a conference call. 

By combining with Comcast, Fox would join a stable of in-house entertainment outfits that include properties run by NBC Universal. Think The Fast the Furious and Jurassic World movies, plus a constellation of TV channels -- not only ones that have NBC in their names but also others like Bravo and Syfy.

Like both Disney and Fox, Comcast is 30 percent owner of the streaming-TV service Hulu. So either company buying Fox potentially means that one of Hulu's parents will suddenly become its controlling owner with a doubled 60 percent stake. 

Burke called Hulu "a very important part of this deal," and financial chief Mike Cavanagh called the streaming service a great business with great prospects. 

"We think we can and should be able to own it, and expect to do so," Cavanagh said of Hulu.

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The offer breaks down to $35 per share in cash, which Comcast says is a 19 percent premium over Disney's offer. Comcast also offered to pay the $2.5 billion breakup fee that Fox had agreed to with Disney, as well as the $1.53 billion fee that would've been paid to Disney, for an additional $4.03 billion. 

Fox said later Wednesday in a statement that its agreement with Disney stands, but that it "will carefully review and consider the Comcast proposal." It said it hasn't decided yet whether it will postpone or cancel its July 10 shareholder meeting to review Disney's deal. 

The deal comes barely a day after a federal judge ruled that telecommunications giant AT&T could buy Time Warner, which signaled to the media, tech and telecom worlds that they had more freedom for wheeling and dealing. It's the first of what's expected to be an onslaught of deals as traditional entertainment powerhouses and internet service providers wrestle with growing competition from the likes of Google, Facebook and Netflix.

The offer, which comes unsolicited, makes good on the wide expectation that Comcast was waiting to throw in a bid for Fox once the uncertainty over AT&T and Time Warner cleared up. 

Disney, meanwhile, would have benefited from Fox's wide range of television and film assets, which would have fed into its streaming services, including a planned rival to Netflix sometimes referred to as Disneyflix. 

"Disney's acquisition of Fox represents the epicenter of Disney's streaming endeavors, and Comcast entering the Fox sweepstakes is a game of high-stakes poker that could change the course of the media and streaming landscape for decades to come, depending on which direction this deal heads," said Daniel Ives, an analyst at GBH Insights. 

Consumer advocacy groups lambasted the deal. 

"Comcast promised that bigger would be better when it merged with NBC Universal," said Jonathan Schwantes, senior policy counsel for Consumers Union. "But consumers have yet to see those promises come to fruition. Prices continue to increase and customers continue to complain about Comcast's lackluster customer service." 

Comcast CEO and Chairman Brian Roberts argued that it was competitively essential for his company to grow by gobbling up some of the biggest entertainment assets in the world. 

"We firmly believe that the truly great media companies of the next century will be large, integrated entities with multiple growth engines across a wide swath of the global entertainment industry," he said on the call. 

The deal also threatens a grand Marvel reunion. Disney, which owns the film rights to the Avengers, could unify the comic-book universe by bringing in-house Fox's rights to the X-Men and Fantastic Four. Comcast snagging Fox would give Universal a well-known comic-book franchise at a time when they're all the rage in the theaters. Universal owns the rights to the Incredible Hulk but has worked with Disney to get the character in Marvel-produced films. 

A Disney representative didn't respond to a message seeking comment. 

Originally published at 1:06 pm PT.
Updated at 2:56 pm PT: with comments from conference call and other details. 

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