After a month of rumors and reports, Comcast has made it official. It’s going to attempt to buy Fox, or at least its production assets. And then Comcast may dump Disney at the altar and drive off with those assets, possibly in a solid gold Lambo. Both Fox and Disney are having shareholder meetings this summer to approve the deal, so Comcast is hoping to lure Fox’s shareholders in with the promise of cold hard cash. But will it work?
Comcast is promising its deal, which is entirely financed by borrowing reportedly $60 billion, will be at least as profitable, if not moreso, than Disney’s. Disney is offering $52 billion in Disney stock, plus the assumption of about $14 billion in debt from Fox, so it comes down to a question of a vote of confidence. Do investors think Disney is going to keep raking in cash — and it’s worth remembering that at the box office alone, the Mouse has made over $3 billion on two movies this year — or do they just want to take a very large pile of money and hit the exit door?
It’s rumored that the Murdoch family, which controls Fox, prefers stock to cash, in part for tax reasons. But at the same time, Murdoch would go from having some control of his studio to being a minority shareholder in a company that’s likey to ignore him. And what will be left of Fox afterwards, mostly its broadcast networks and Fox News, will be facing some pretty severe problems going forward: Fox scrapped a big chunk of its lineup, mostly thanks to acquiring Thursday Night Football, and the economic realities of making TV: Broadcast networks air the shows their corporate overlords produce through other arms of the company. Fox will be without a production arm after the Disney deal goes through. Billions of dollars in the bank would be a nice cushion, but we’ll see what happens as negotiations unfold this summer.