September 24, 2018

With Two Suitors for Fox, the Murdochs Consider Next Steps

That outcome could help Comcast, which will be challenged on two fronts: as a content distributor, through its cable and broadband service, and as a content provider, via its NBCUniversal division.

Last week’s ruling allowed ATT, a distributor, to purchase Time Warner, a news and entertainment colossus that owns HBO, CNN and the Warner Bros. film studio. The decision could conceivably be applied to the Comcast-Fox deal, according to at least one former lawyer for the Justice Department.

When announcing his company’s bid for Fox last week, Brian L. Roberts, Comcast’s chief executive, said he was “highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction.”

Sports networks on the table

However, Fox owns 22 regional sports networks, such as the Yankees’ YES channel in the New York area. Comcast’s NBCUniversal group already operates nine regional sports networks, while Disney has control of ESPN, the dominant cable sports channel in the country. The Justice Department could see either of these combinations as potentially stifling competition.

Mr. Murdoch and his board will want to see which side has crafted the better regulatory maneuver. Both Disney and Comcast are willing to divest the regional sports networks should the government require.

Separately, Hulu would come under the control of either Comcast or Fox — both of which currently own portions of the streaming service. The Justice Department could see Comcast as a possible threat here since it is also the largest broadband provider in the country. Disney is just a programmer. But according to two people familiar with the matter who spoke on condition of anonymity to discuss company deliberations, Comcast would also consider selling Fox’s 30 percent ownership of Hulu as a concession.

In other words, it might be a regulatory wash.

Taxes matter

If so, then it comes back to which offer is better. Mr. Murdoch is said to have favored Disney’s offer last year, partly because an all-stock transaction would not require an immediate tax payment. Comcast’s bid is all cash and would be taxable right away.

Article source: https://www.nytimes.com/2018/06/18/business/media/fox-comcast-disney-whats-next.html?partner=rss&emc=rss

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