Disney raised its bid for Twenty-First Century Fox on Wednesday. The new bid outweighs Comcast’s offer of $65 billion.
How the Deal Would Affect Shareholders
Disney is offering cash and stock. Comcast is offering all cash. With a stock deal, current Fox shareholders wouldn’t have to pay taxes on their capital gains. The current largest shareholder of Fox, Rupert Murdoch, would pay significantly under Comcast’s deal. He owns 17 percent of the company.
News of the increased bid caused Fox shares to increase by more than 7 percent. If Disney buys Fox, Fox shareholders will own 19 percent of the new combined company. That places investors who hold shares in both companies in a unique position to increase their ownership of Disney.
Disney would also inherit $13.8 billion of debt from Fox, alleviating Fox shareholders from that risk.
What’s In It for Disney?
Disney is looking to compete with streaming services Netflix and Amazon Video. The deal would allow them to add the X-Men and the Simpsons to their portfolio. They could then continue producing for both series, and more. Doing so would provide them with more material for the box office, ad-sponsored television, and paid streaming service.
They would also take ownership of Fox’s Star India. Disney would be able to use the company to reach a large, international population.
Other aspects of the Fox media group, including Fox News, Sports, and Business Network are not part of the deal. They would become their own group if Fox sells to either Disney or Comcast.
Comcast’s Next Move?
Comcast didn’t comment on the new bid from Disney. They will need to decide whether they will raise their bid. Tuna Amobi is an analyst at CFRA Research. He thinks that Comcast will need to raise their bid by 15 percent to make their offer attractive to Fox.
Bob Iger is the Chief Executive Officer at Disney. He said he doesn’t think antitrust laws will be an issue in this case. He has been conversing with regulators for the past six months to ensure the deal goes through smoothly if Fox accepts. He also said that Comcast might not have as easy of a time making it through the regulations.