Disney Boosts Fox Bid to $71.3 Billion in Cash and Stock

Disney chairman and CEO Bob Iger told analysts his studio was better placed to secure regulatory approval for a Fox assets merger than Comcast.

Walt Disney on Wednesday said that it has boosted the value of its takeover agreement for large parts of 21st Century Fox to $71.3 billion in cash and stock, following Comcast’s $65 billion all-cash offer from June 13.

The Comcast offer was for the same entertainment assets that Walt Disney had in December agreed to acquire for $52.4 billion in stock.

Disney chairman and CEO Bob Iger during an analyst call said his company was better placed than Comcast to secure regulatory approval for its 21st Century Fox assets bid. "We have a much better opportunity in terms of approval and the timing of that approval than Comcast does in this case. ... We are confident that we have a clear and timely path to approval," the exec argued.

Iger added his studio's advantage in the regulatory realm was underlined by U.S. District Court Judge Richard Leon last week issuing his blockbuster decision in the landmark antitrust lawsuit over the $80 billion merger between AT&T and Time Warner. He specifically cited Judge Leon arguing a vertical merger can "generate competitive harm."

Iger added Comcast's dominance in the U.S. high-speed broadband market was more likely to raise alarm bells with regulators than Disney's film, TV and distribution assets, which he insisted will represent a "compelling proposition" for consumers if merged with the 21st Century assets now up for grabs.

"The dominance in broadband and cable and when you factor in their content ownership already, including a major broadcast network and multiple television stations and multiple cable channels, it's just simply an apples to oranges comparison to what the Justice Department was considering in the AT&T acquisition of Time Warner," Iger told analysts about Comcast after the U.S. cable giant cited AT&T prevailing in the antitrust trial to acquire Time Warner to justify its own bid for the 21st Century Fox assets.

The Disney chief added that his studio was already six months into dealing with regulators, which represented a "meaningful headstart." Iger declined to give an update on Disney's separate deal in principle to acquire the Sky News network from European pay TV giant Sky.

"Fox is in the driver's seat," the exec told analysts. The new Disney-Fox deal, unveiled by the conglomerates early Wednesday, is worth $38 per share in cash and stock, or $71.3 billion. Shares in 21st Century Fox opened in morning trading up $2.76, or just over 6 percent, to $47.05 on the NASDAQ Exchange.

Disney also will assume about $13.8 billion of Fox's net debt, which would boost the total transaction value to approximately $85.1 billion.

"Under the amended agreement, 21st Century Fox shareholders may elect to receive, for each share of 21st Century Fox common stock, $38 in either cash or shares of Disney common stock," Disney said. "The overall mix of consideration paid to 21st Century Fox shareholders will be approximately 50 percent cash and 50 percent stock."

Fox's board met Wednesday and was understood to be weighing the price tags of bids for the Fox assets that are for sale along with tax bills, which are higher for cash bids, regulatory concerns and other issues.

Fox around 8 a.m. ET Wednesday said the sweetened Disney offer was "superior" to Comcast's. "We are extremely proud of the businesses we have built at 21st Century Fox, and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry," said Rupert Murdoch, executive co-chairman of Fox. "We remain convinced that the combination of 21st Century Fox's iconic assets, brands and franchises with Disney's will create one of the greatest, most innovative companies in the world."

Disney again emphasized the business and strategic benefits of the takeover, which includes the Fox film and TV studio, FX, NatGeo, Fox's 30 percent stake in Hulu and its international assets, including Star India and its 39 percent stake in European pay TV giant Sky.

"The acquisition of 21st Century Fox will bring significant financial value to the shareholders of both companies, and after six months of integration planning we’re even more enthusiastic and confident in the strategic fit of the assets and the talent at Fox,” Iger said earlier in a statement. "At a time of dynamic change in the entertainment industry, the combination of Disney’s and Fox’s unparalleled collection of businesses and franchises will allow us to create more appealing high-quality content, expand our direct-to-consumer offerings and international presence, and deliver more personalized and compelling entertainment experiences to meet growing consumer demand around the world."

Jefferies analyst John Janedis has said the bidding could go as high as $80 billion if Comcast and Disney continue to battle for Fox.

Fox on Wednesday also postponed a planned shareholder meeting that had been scheduled for July 10 to vote on the Disney deal in a potential sign that the company isn't ruling out a Comcast counter. The company "has determined to postpone its special meeting of stockholders to a future date in order to provide stockholders the opportunity to evaluate the terms of Disney's revised proposal and other developments to date."

Comcast, led by chairman and CEO Brian Roberts, officially bid for the assets — which include the Fox film and TV studio, FX, NatGeo, Fox’s 30 percent stake in Hulu, Star India and a 39 percent stake in European pay TV giant Sky — a day after a judge ruled that the Justice Department couldn’t prevent telecom giant AT&T from buying Time Warner for $85.4 billion.

June 20, 10:45 a.m. Updated with comments by Walt Disney chairman and CEO Bob Iger to analysts.