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Comcast’s Offer for Fox after Disney’s Deal Got the Nod from the DoJ

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Comcast mulling over quoting a higher bid

Walt Disney (DIS) recently received the green light from the US Department of Justice (or DoJ) to move ahead with its $71.3 billion deal to buy the media and entertainment assets of 21st Century Fox (FOXA). This deal was announced on June 20. Comcast (CMCSA) was a rival bidder for Fox’s premium assets. 

On June 13, Comcast made an acquisition offer of $65.0 billion ($35.00 per share). However, the company would have to raise its offer price to acquire Fox under these conditions.

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Higher offer brings debt load

As Disney has received approval from the DoJ, the pressure on Comcast has increased to improve its offer over Disney’s latest proposal. In this scenario, Comcast would need to look for additional financing to support a heftier offer for Fox’s assets.

Comcast reportedly intended to make an offer of at least $75.0 billion as a counterbid to gain control over Fox’s assets. Comcast is also looking to buy a 61.0% stake in London-based Sky plc, whose 39.0% stake is with Fox. So, a higher bid for Fox would significantly pressure Comcast’s balance sheet. 

According to industry sources, an offer of about $41.00 or $42.00 per share in cash would dramatically dent its credit rating and burden Comcast with a heavy debt load. Comcast’s long-term debt at the end of the first quarter was $63.7 billion, up from $58.2 billion year-over-year.

According to the Wall Street Journal, Comcast could bring in additional partners if the bid climbs as high as $90.0 billion. In that scenario, Comcast could reportedly take Fox’s international assets and ask its partner to take on its 20th Century Fox studio, FX Networks, and other US-centric businesses. In taking up Fox’s foreign assets, Comcast expects to grow in the international markets, where it doesn’t have a presence.

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