21st Century Fox Shares Soar on Reports of Comcast Acquisition Overture, Verizon Interest
Comcast has approached 21st Century Fox about acquiring key assets including its movie and TV studio and selected cable networks.
The move, first reported Thursday evening by the Wall Street Journal, comes a week after the media world was jolted by reports that Disney held preliminary talks with Fox about acquiring the same collection of assets in recent weeks. Those talks were said to have broken down quickly over price, but the fact that the Murdochs would entertain such an offer at all had the effect of turning Fox into an acquisition target. Indeed, Dow Jones reported Thursday that telco giant Verizon is also eyeing a possible Fox bid.
The chase for some of Fox’s most prominent assets also comes as the AT&T-Time Warner merger hangs in the balance with the Justice Department expected to take steps that would force AT&T to radically alter the deal or block it outright, which would put Time Warner back in play.
Fox shares shot up more than 8% in after-hours trading after the CNBC report landed just before 5 p.m. ET.
A rep for Comcast declined to comment. Fox reps could not immediately be reached for comment.
Comcast’s overture is surprising given the Justice Department’s tough stance on AT&T-Time Warner. Comcast’s size and scope — the combination of its cable distribution heft and its content holdings in NBCUniversal — has made it a frequent target for critics of media consolidation.
The union of 20th Century Fox’s film and TV production assets with NBCU’s Universal Pictures and Universal Television operations would greatly expand NBCU’s share of the content market. The cable programming assets in the mix are believed to be Fox’s FX Networks and National Geographic channel group, as well as Fox’s collection of more than 300 international channels. Comcast still has a tiny footprint overseas, but domestically it already ranks as one of the biggest cable programmers with USA Network, Bravo, Syfy, Oxygen, CNBC, MSNBC, E! and NBC Sports in the fold.
Like Disney, Comcast’s view of the deal reportedly does not include the Fox broadcast network, the local Fox TV stations or the Fox News and Fox Sports operations. Combining those with NBCUniversal’s existing sports and news assets would probably be an insurmountable regulatory hurdle. Nor could Comcast reasonably expect to sidestep the existing FCC regulation that bars a single entity from owning more than one of the Big Four broadcast networks. NBCUniversal is already home to NBC.
The heightened level of acquisition chatter around Fox comes just a day after leaders told shareholders at the company’s annual meeting that the conglomerate built up since the 1980s by Rupert Murdoch was not in the category of “sub-scale” players facing pressure to sell as the media business undergoes massive shifts spurred in part by the rise of digital behemoths a la Netflix, Facebook, and Amazon.
“There’s a lot of talk about the growing importance of scale in the media industry,” 21st Century Fox executive chairman Lachlan Murdoch said Wednesday . “Sub-scale players are finding it difficult to leverage their positions in new and emerging video platforms. Let me be very clear: We are not in that category. We have the required scale to continue to both execute on our aggressive growth strategy and deliver significant increased returns to shareholders.”
During Fox’s quarterly earnings call last week, Lachlan Murdoch and CEO James Murdoch would not comment on the Disney rumors but emphasized that the company is not in duress.
“We are singularly and intently focused on delivering on our strategic plan,” Lachlan Murdoch said. “Our businesses and brands are stronger than ever.”
(Pictured: Comcast chairman-CEO Brian Roberts and 21st Century Fox CEO James Murdoch)
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