Several prominent media analysts have weighed in on the bidding war between Disney and Comcast over Fox. And the prognosis? Disney appears to have the advantage, according to a report from Deadline.
Media analysts say that Disney’s $71.3 billion bid to acquire Fox is not only substantially larger than Comcast’s, but it also offers tax advantages for the family of Fox executive chairman Rupert Murdoch—and potentially for the other shareholders. Analysts also contend that any counteroffer from Comcast would need to be significantly more than its previous bid of $65 billion. (Comcast is the parent company of NBC Universal, which owns SYFY WIRE.)
“[T]he strategic rationale just doesn’t appear to be there for Comcast to chase,” wrote Cowen and Co. media analyst Doug Creutz. “Management cited geographic diversification as an important reason for the bid. However, if Comcast shareholders desire that type of diversification, they are completely free to go rebalance their portfolio in the open market without paying a big M&A premium.”
Added Creutz: “Disney has a much better reason to escalate bidding than Comcast does.”
Needham & Co.’s Laura Martin notes that Disney has an easier path to winning shareholder approval. “Since we expect the Murdoch family to vote its 17% of shares in favor of the Disney bid, and a 51% simple majority is all that is needed to win, Disney only needs about 40% of non-Murdoch shareholders to win,” wrote Martin. “This compares with requiring about 50% of non-Murdoch shareholders for Comcast to win.”
Macquarie’s Amy Yong reasserted her neutral rating on Comcast’s stock in a research note released Tuesday morning, pointing out that some investors have become wary of Comcast’s debt levels should it push harder toward doing more M&A deals. “M&A/leverage trump near-term earnings,” Yong wrote.
However, not all analysts are on Team Disney. BTIG media analyst Rich Greenfield wrote: “If we were in Comcast’s shoes, we would literally push Disney to their breaking point to see if we could make them blink and give up.”
We'll keep you posted as more information about this bidding war becomes available.