Disney forced to drop certain Fox assets
Regulators have reshaped the Disney-Fox deal to the point that investors may be asking whether Walt Disney (DIS) is still getting what it wanted when it bought most of 21st Century Fox’s (FOX) assets for $71.3 billion last year. In the United States and Brazil, regulators demanded that Disney drop Fox’s regional sports channels before approving the deal, and Disney complied. Disney was also required to divest certain assets in Europe, but in China, the deal sailed through without conditions.
Disney forced to hike bid for Fox
While disposing of some Fox assets may help Disney raise funds to pay down its debt and reinvest in growth, the forced divestiture may prevent Disney from selling the assets at the prices it wants and leave it with less than it had expected from the Fox assets.
Disney is already paying more than it had planned for the Fox assets—it had originally agreed to purchase Fox assets for $52.4 billion, but the price jumped to $71.3 billion after Comcast (CMCSA) showed up with a rival bid for Fox’s assets.
In the first quarter of its fiscal 2019 (ended in December), Disney’s revenue fell slightly YoY (year-over-year) to $15.3 billion. In the same period, Comcast’s and Charter Communications’ (CHTR) revenue grew 26.1% and 5.9% YoY, respectively, while Dish Network’s (DISH) fell 5.1% YoY.