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Comcast Gives Up on Fox, Focuses on Sky

Like others bent on global domination before it, Comcast has learned the hard way that it can't win a two-front war.

Comcast Corp. (Nasdaq: CMCSA, CMCSK) officially threw in the towel today on its ambitious bid to buy the prime assets of 21st Century Fox in the US, choosing instead to put all its M&A attention on its equally ambitious bid for Sky in the UK. In a brief written statement issued this morning, Comcast said it "does not intend to pursue further the acquisition of the Twenty-First Century Fox assets and, instead, will focus on our recommended offer for Sky." Comcast Chairman & CEO Brian Roberts also congratulated Disney on its victory and commended "the Murdoch family and Fox for creating such a desirable and respected company."

By ceding Fox to Disney, Comcast put an end to one of the biggest battles in the media industry this year, as the two media giants scrapped over Fox's Hollywood movie studio and major TV properties. Entering the contest late, Comcast made an all-cash $65 billion offer for the Fox assets last month. But Disney quickly topped Comcast's offer with its own beefed-up $71.3 billion bid just a week later. (See Comcast Makes $65B Bid for 21st Century Fox and Disney Puts Up $71.3B Bid for 21st Century Fox.)

Besides the higher bid, two recent actions by the US Justice Department pretty much sealed the deal for Disney. First, the Antitrust Division of the U.S. Department of Justice cleared Disney's Fox bid, with Disney agreeing to spin off Fox's sports networks to earn the government's blessing. Then, in an unrelated but significant move, the Justice Department last week appealed a federal court's approval of AT&T's purchase of Time Warner, signaling that a similar effort by Comcast to buy a large content provider would likely be hotly contested by the Trump administration too. (See The US DOJ May Be Appealing the AT&T-Time Warner Merger Trial.)

So now the focus will shift to the UK, where Comcast is competing with Fox for control of Sky. In the latest move on that front, Comcast boosted its takeover bid for Sky to $34.2 billion last Thursday after Fox increased its offer to $32.5 billion just a day earlier. (See Eurobites: Comcast Ups Its Bid for Sky and Fox Trumps Comcast With $32.5B Bid for Sky.)

Now that the Murdoch clan has gotten its preferred suitor for its US movie and TV properties, will it let Comcast win the battle for Sky and forego another higher bid? It's tough to say yet, but Sky investors appear to believe that. Sky's share price immediately fell after the Comcast announcement and remained down about 1.5% in late trading in London. Meanwhile, Comcast's share price is up 3.1% as of noon ET, while Fox shares are down 1.7%.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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