Comcast’s deal for Fox assets
Comcast (CMCSA) recently made an all-cash $65 billion offer for 21st Century Fox’s (FOXA) media and entertainment assets, outbidding Walt Disney’s (DIS) all-stock offer of $52.4 billion. Notably, Comcast’s proposal came after AT&T (T) received federal approval to merge with Time Warner.
Comcast is seeking to buy Fox’s film and television units, including FX, National Geographic, and Sky’s international pay-TV services. The acquisition of Fox’s assets would also give Comcast access to a larger stake in Hulu’s streaming services.
Comcast struggling to grow its customer base
Comcast, like many cable and pay-TV companies, is struggling to attract a customer base and therefore looking to amass more premium content. The company is losing video customers amid rising demand for online digital streaming services such as Netflix (NFLX), Amazon, and YouTube, which attract traditional cable subscribers by offering lower video prices. While Comcast lost 93,000 residential video customers in the first quarter of 2018, telecom behemoth AT&T lost 188,000 satellite TV customers.
Fox assets could be a boon for Comcast
Comcast’s acquisition of Fox’s assets would add more channels to its lineup and could make it more competitive. The deal would also give Comcast control over Fox’s cable and international TV businesses, which could help Comcast expand globally.
The acquisition of Sky is expected to revive its pay-TV business and generate significant revenue. The Comcast-Fox deal could also give Comcast a dominant stake in Internet video provider Hulu. Currently, Comcast owns 30% of Hulu, and the acquisition of Fox would give Comcast another 30% of Hulu. Disney also has 30% stake in Hulu, and Time Warner (now owned by AT&T) has a 10% stake in Hulu.