Disney DIS recently announced that the Antitrust Division of the United States Department of Justice (DOJ) has cleared its pending acquisition of Twenty-First Century Fox’s FOXA assets.
However, the approval is subject to the condition that Disney will divest Fox Sports Regional Networks within a maximum of 180 days from the date of closing of the acquisition transaction. The regional channels include Fox's YES Network, which airs New York Yankees baseball games around the New York metro area.
The networks currently have approximately 61 million subscribers and have rights to telecast live games of 44 out of 81 U.S. professional sports teams in Major League Baseball (MLB), the National Basketball Association (NBA) and the National Hockey League (NHL) collegiate conferences, and numerous college and high school sports teams.
Disney Gains Edge Over Comcast
The approval surely removes a major hurdle for Disney and provides it an edge over Comcast CMCSA in the ongoing bidding war for Fox’s assets.
The Walt Disney Company Price and Consensus
The Walt Disney Company Price and Consensus | The Walt Disney Company Quote
Disney’s latest bid of $71.3 billion is not only $18.9 billion higher than its first bid, made in December, but also $6.3 billion more than Comcast’s all-cash offer. Reportedly, Disney’s latest offer would split the payout equally between cash and stock.
However, the approval is unlikely to decide the final fate of the battle for Fox’s assets. Comcast is expected to submit a higher bid. Per The Wall Street Journal (WSJ), the cable giant has been looking for partners, including private-equity investors, to secure additional cash for acquiring Fox’s assets.
Why Fox’s Assets Are Attractive for Disney & Comcast?
Fox’s assets will significantly expand both Disney & Comcast’s content portfolio.
Fox’s large library of TV shows and movies like The Simpsons and Avatar will boost their competitive position against Netflix NFLX and Amazon Prime.
Further, the telecasting rights of MLB and NBA in the United States, Premier League, Serie A, Bundesliga and UEFA Champions League in the Europe, and Indian Premier League (IPL) are at stake.
Moreover, Fox Networks International operates more than 350 channels in 170 countries, while Star India has 69 channels serving 720 viewers per month. These assets will help in significant expansion of international footprint for the acquirer.
Zacks Rank
Currently, Disney has a Zacks Rank #2 (Buy), while Comcast carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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