The Fox hunt is on.
Comcast Corp. late Wednesday offered $65 billion for much of 21st Century Fox, a 19 percent premium over the December offer from Walt Disney Co., which Fox Chairman Rupert Murdoch had already accepted.
To further sweeten the all-cash deal, Comcast said it would pay a $2.5-billion breakup fee should Comcast fail to win regulatory approval for the deal.
Comcast Chief Executive Brian Roberts' renewed bid comes six months after Murdoch had rejected his initial offer, citing concerns about regulatory issues and the lack of a breakup fee.
The stakes are enormous. Comcast and Disney have long been the nation's two largest traditional entertainment companies, but this month, streaming service Netflix, with a market capitalization of $165 billion, surpassed the value of the Burbank-based Disney.
Both Disney Chief Executive Bob Iger and Roberts of Comcast recognize that they will probably need extensive international operations and a huge pipeline of TV shows and movies to survive in the digital age. The Fox assets that are in play — including growing TV operations in India, Latin America and Europe — would allow either Disney or Comcast to bulk up with just one big bite.
Now, Murdoch and his board must decide whether Comcast's bid would have a shot at prevailing and whether the bid is indeed better than Disney's. Should that happen, Disney would then have a five-day window to match or beat Comcast's offer, according to Disney's and Fox's regulatory filings. If Fox ultimately bypassed Disney in favor of selling the assets to Comcast, then Fox would owe Disney a $1.5-million breakup fee to walk away from the earlier deal.
"The next major question is how Disney and Fox will react," Cowen & Co. media analyst Doug Creutz wrote Wednesday in a research report. "At this point, we don't have a strong view on whether Disney will engage in a bidding war — CEO Bob Iger has never (as far as we are aware) been put in a position where a proposed acquisition faced a significant competitive challenge such as this."
Disney did not immediately comment on Comcast's higher bid.