Disney works its magic on Fox

As Disney trumps Comcast with a better bid for Fox, Daniel Ives, head of technology research at GBH Insights’, tells IGTV’s Victoria Scholar why this deal could in fact benefit its streaming rival Netflix. 

The battle for 21st Century Fox intensified this week between Walt Disney and Comcast. Shares in Fox closed Wednesday’s session higher by 7.54% after Disney increased its bid for the Murdoch-run media conglomerate to $71.3 billion. That is equivalent to $38 per share in a deal that is a mix of cash and stock. It is a sharp increase from Disney’s previous offer of $28 per share, equivalent to $52.4 billion in stock, and tops rival Comcast’s $35 per share all-cash offer last week, which valued Fox at $65 billion. Fox has said that Disney’s latest offer is superior, and pressure is now on Comcast to return to the table with a counter-bid.

Fox must now choose between an all-cash offer from Comcast and a cash and stock mix from Disney. Some analysts say the Murdoch family may prefer the latter for tax reasons. Fox was scheduled to hold a shareholder vote on 10 July, but this has now been delayed to give the company time to make its decision.

Disney is close to getting the deal over the necessary regulatory hurdles, according to a Bloomberg report citing a person familiar with the matter, suggesting that the Justice Department could approve the tie up in a fortnight. Disney CEO, Bob Iger, said, ‘we have a much better opportunity in terms of approval and the timing of that approval than Comcast does in this case,’ suggesting that he is confident about winning the deal.  

Disney’s increased bid to top Comcast is a ‘smart strategic poker move’, according to GBH Insights’ head of technology research, Daniel Ives. He says this will help Disney ‘to catalyse its streaming and content ambitions over the coming years. This deal, if successful in its battle with Comcast, would put Disney in the catbird’s seat in terms of being the content king, and with its streaming service set to launch in 2019, Iger has a clear runway to gain market and mind share from the likes of Netflix’. Ives said that if Comcast beats Disney to these Fox assets, it would be a ‘devastating and hard to recover blow’, underscoring the significance of this media battle.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IG Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer