Twenty-First Century Fox's board is set to decide on Wednesday whether to entertain Comcast's $65 billion cash bid for the New York-based media company or stick with its roughly $52 billion all-stock offer from Walt Disney, people familiar with the matter said.

Disney and Comcast are battling to win Fox's movie and television studios at a time when legacy media and distribution companies are looking to expand to better compete with younger media firms like Netflix that sell their content directly to viewers. Fox's international assets such as Star India appeal to both Disney and Comcast, which want to expand their global presence.

While Fox's board has yet to make a decision, analysts and industry dealmakers widely expect Fox to say that Comcast's bid could potentially lead to a better deal for its shareholders. If it does, Fox would then be allowed to negotiate with Comcast and take a closer look at its offer. This would be the time for Fox to learn more about Comcast's commitments when it comes to regulatory approval, for example.

"Let the ping-pong tournament begin, as Comcast won't let Fox brush off its all-cash premium offer without a fight," Macquarie analyst Amy Yong said in a research note last week.

Once Fox engages in talks with Comcast, it will then have to determine if the offer is definitively a superior deal for Fox shareholders, compared with its agreement with Disney. This will be the first step that could lead to a bidding war as Disney will then have five business days to put a revised offer on the table, according to its merger agreement.

Disney could sweeten its all-stock bid with cash, given its strong balance sheet and the potential boost to earnings per share, according to the people familiar with the matter.

Technically, Fox could also rebuff Comcast's bid on Wednesday, but that is unlikely, said Morningstar analyst Allan Nichols.

"Because of the liabilities of the board I don't think they can outright say no to Comcast's offer. You at least need to do some kind of review process," he said.