Fox, Comcast Extend Offer for Sky to Oct. 6

As expected, 21stCentury Fox has extended its offer for remaining shares of U.K. satellite TV distributor Sky to Oct. 6 – the same date Comcast extended its competing offer.

Comcast currently holds the higher bid: $34 billion (£14.75 per share) compared to Fox’s £14 per share. Yet neither offer has resonated with Sky shareholders, with less 30% of shareholders tendering Comcast’s offer compared to 0.07% for Fox’s offer.

Fox, which is controlled by Rupert Murdoch, currently owns 39% of Sky. The Walt Disney Co. outbid Comcast for select Fox assets, which include 20thCentury Fox Film and Sky.

With Sky’ stock closing down Sept. 17 at £15.78 per share in London, it’s clear investors are hoping for a superior bid from either Comcast, Fox or even Disney.

Following the deadline, corporate takeover rules in the United Kingdom mandate a five-day sealed auction overseen by regulators with Comcast, Fox and Sky agreeing on the terms.

 

 

 

Fox Doubles Fiscal-Year Hulu Equity Loss

Hulu, the SVOD service co-owned by The Walt Disney Co., Comcast, 21st Century Fox and WarnerMedia, may have 20 million subscribers, an Emmy-winning series (“The Handmaid’s Tale”) and an online TV component. It also has burgeoning costs for its corporate owners.

Fox on Aug. 8 disclosed it generated a $127 million fourth-quarter (ended June 30) equity loss for its 30% stake in Hulu. That was up 135% from an equity loss of $54 million during the previous-year period.

For its fiscal year, Fox posted a Hulu equity loss of $445 million – more than double the $215 million equity loss last year.

With Disney assuming Fox’s Hulu stake (for 60% controlling stake) as part of its $71 billion acquisition of 20thCentury Fox Film and other Fox assets, expect the Mickey Mouse company’s equity loss to increase.

Disney CFO Christine McCarthy alluded as much on the company’s Aug. 7 fiscal call.

“The higher losses at Hulu were primarily driven by higher programming and labor costs, partially offset by higher subscription and advertising revenue,” McCarthy said

Indeed, Disney attributed a $49 million second-quarter equity loss to Hulu, which mushroomed to a $193 million through the first six months of the year.

Hulu lost $920 million in 2017 compared to a loss of $531 million in 2016. The fiscal loss is reportedly projected to reach $1.7 billion this year as the service ups original content spending on “The Handmaid’s Tale,” “Marvel’s Runaways,” “Future Man,” and “The Doozers,” among others.

 

Disney, Fox Shareholders Approve Historic Deal

The big deal is on.

As expected, shareholders of The Walt Disney Co. and 21st Century Fox  on July 27 approved Disney’s acquisition of Fox’s entertainment assets, in one of the biggest media mergers of all time.

Investors approved the $71.3 billion deal – first proposed last December – in separate meetings at the New York Hilton. Both meetings were brief, less than 15 minutes. Fox shareholders were told the union would be completed in the first half of 2019.

Indeed, 21st Century Fox, which is selling select Fox assets, including 20th Century Fox Film, and Disney July 26 filed for regulatory approval in Brazil, claiming the merger does not hinder competition.

The shareholder vote came a month, to the day, after Disney won U.S. antitrust approval to buy Fox’s entertainment assets on the condition it divest 22 Regional Sports Networks (RSNs).

Disney had initially offered $52.4 billion to buy the Fox movie and TV assets, but after Comcast Corporation in early June countered with a $65 billion all-cash deal, Disney upped its cash-and-stock offer to $71.3 billion.

A little more than a week ago, Comcast dropped its bid and shifted its focus to buying European pay-TV operator Sky.

Fox Tops Comcast’s Sky Merger Offer

The “Sky” is apparently the limit for 21st Century Fox, which on July 11 upped its offer more than 30% for the British satellite TV operator to £14 per share — valuing the company at $32.5 billion. Fox, in late 2016, offered £10.75 per share of Sky stock (61%) it did not already own.

The bid represents an 82% premium on Sky’s £7.69 per share closing price the day before Fox’s initial bid. It also tops Comcast’s rival offer of £12.50 per share.

“As a founding member of Sky, we have remained deeply committed to bringing these two organizations together to create a world-class business positioned to deliver the very best entertainment experiences well into the future,” Fox said in a statement.

It’s a sentiment shared by The Walt Disney Co. and Comcast, which both have competing takeover bids for select Fox assets, including 2oth Century Fox Film and Sky.

Consolidation in the media world is in full swing following AT&T’s $85 billion acquisition of Time Warner as companies grapple with over-the-top video and subscription streaming video behemoths Netflix and Amazon Prime Video.

Disney last month upped its offer for Fox to $71.3 billion after Comcast bid $65 billion — topping Disney’s initial $52.4 billion acquisition amount.

Federal regulators last month approved Disney’s bid after the Mickey Mouse company agreed to divest 22 regional Fox Sports networks. Across the pond, the U.K. Secretary of State is expected rule on the Fox/Sky deal by July 12.

Regardless, Sky shares closed July 10 at £15.01 per share suggesting the sky is indeed the limit for shareholders convinced the bidding war will continue.

FuboTV Hires New Chief Technology Officer

FuboTV, the upstart online TV service co-funded by 21st Century Fox, has hired Geir Magnusson Jr. as its new chief technology officer.

Magnusson, who is the co-founder and former CTO of Sourcepoint Technologies, replaces Jason Solinsky, the ex-Google engineer FuboTV hired two years ago to its sports-centric platform.

“Geir has a strong track record of scaling complex global platforms and a proven ability to guide transformation at leading tech companies,” David Gandler, co-founder and CEO of FuboTV said in a statement. “We believe Geir’s expertise and passion for innovation will ensure we maintain our leadership position as we deliver to consumers a next-generation live OTT experience.”

The platform earlier this month launched 4K HDR10 support in beta, claiming to be the first virtual multichannel video programming distributor to offer content in ultra-high-definition and high dynamic range.

Starting July 2, broadcasts of Russia 2018 World Cup soccer on Fox and FS1 were available in 4K HDR10 with FuboTV on all Chromecast and Fire TV devices that support the format. FuboTV will also launch 4K HDR10 on Roku and Apple TV in the coming weeks.

Disney, Fox Shareholders to Vote on Merger July 27

The day after The Justice Department June 27 approved The Walt Disney Co.’s $71.3 billion cash/stock acquisition of 20th Century Fox Film (which includes British satellite TV operator Sky Plc.) both Disney and 21st Century Fox announced their respective shareholders will vote July 27 on the mega-merger.

Both companies canceled previously-slated July 10 shareholder votes after Comcast submitted a rival $65 billion all cash offer that trumped Disney’s initial $52.4 billion bid.

The new vote date gives the corporate parent of Comcast Cable, NBC Universal and DreamWorks Animation less than a month to secure a new bid.

Media reports suggest Comcast – whose cable operations are under threat from over-the-top video services such as Netflix and Amazon Prime Video and needs Fox content – will counter.

“We believe another counteroffer from Comcast for Fox is likely,” John Hodulik, analyst with UBS, told Deadline.com.

Moody’s Investor Service reportedly said Comcast’s current offer would push the company’s debt load to more than $170 billion.

While corporate debt is relative, both Fox and Disney contended their deal would pass regulatory muster more easily than Comcast’s. And apparently it did.

While the antitrust unit of the Department of Justice entered into a consent decree with Disney and 21st Century Fox that allows the acquisition to proceed – mandating the sale of the Fox Sports Regional Networks as a requirement – it has made no ruling on Comcast’s offer.

Regardless, Disney has at least 90 days from the date of closing the transaction to complete the sale, with the possibility that the DOJ can grant extensions of time up to another 90 days. The decree is subject to the normal court approval process.

But first, shareholders have to vote.

 

Disney Sweetens Fox Offer to $71.3 Billion

The Walt Disney Co. June 20 announced it signed an amended acquisition agreement with 21st Century Fox, agreeing to pay $71.3 billion for 20th Century Fox Film, which includes British satellite TV operator Sky Plc., and 20th Century Fox Home Entertainment, among other properties.

The $38 per share in cash and stock offer ups Disney’s existing $52 billion bid and bests Comcast’s rival $65 billion offer. Disney said it would acquire Fox immediately following the spin-off of the businesses comprising “New Fox” as previously announced.

Fox businesses to be acquired by Disney remain the same as under the original agreement. Since the original agreement was announced, the intrinsic value of these assets has increased, notably due to tax reform and operating improvements.

“The acquisition of Fox will bring significant financial value to the shareholders of both companies, and after six months of integration planning we’re even more enthusiastic and confident in the strategic fit of the assets and the talent at Fox,” Disney CEO Bob Iger said in a statement.

Iger said that at a time of “dynamic change” in the entertainment industry, combining Disney and Fox’s businesses and franchises would translate into more “appealing high-quality content,” while expanding Disney’s ambitious direct-to-consumer offerings and international presence.

Indeed, the acquisition would significantly increase Disney’s international footprint and expand its over-the-top video offerings, which include ESPN+; a Disney-branded streaming video-on-demand service launching in late 2019 that will feature Disney, Pixar, Marvel and “Star Wars” films along with a host of exclusive original content and library titles; and its ownership stake in Hulu. As a result of the acquisition, Disney would hold a controlling stake in Hulu.

Transaction Details

The deal allows Fox shareholders to choose either Disney stock or cash for their shares. Disney is expected to pay a total of approximately $35.7 billion in cash and issue approximately 343 million new shares to Fox shareholders, representing about a 19% stake in Disney on a pro forma basis.

Disney would assume about $13.8 billion of net debt of Fox. The acquisition price implies a total equity value of approximately $71.3 billion and a total transaction value of approximately $85.1 billion (assuming no tax adjustment). Disney has secured financing commitments for the cash portion of the acquisition.

As announced in the original acquisition agreement, the businesses to be acquired by Disney include Fox’s film production businesses, including 20th Century Fox, Fox Searchlight Pictures and Fox 2000 Pictures; Fox‘s television creative units, 20th Century Fox Television, FX Productions and Fox21; FX Networks; National Geographic Partners; Fox Sports Regional Networks; Fox Networks Group International; Star India; and Fox’s interests in Hulu, Sky plc, and Tata Sky.

The acquisition would occur immediately after the spin-off by 21st Century Fox of the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company referred to as New Fox.

If 21st Century Fox completes its acquisition of the 61% of Sky it doesn’t already own prior to closing of the Disney acquisition, Disney would assume full ownership of Sky, including the assumption of its outstanding debt, upon closing.

Disney believes the transaction has a clear path to regulatory approval. Both companies have spent the past six months working toward meeting all conditions necessary for closing. In the amended agreement, Disney has increased the scope of its commitment to take actions required to secure regulatory approval.

The amended agreement has been approved by the boards of directors of Disney and 21st Century Fox.

Comcast Offers $65 Billion for Fox

Comcast Corp. has submitted a $65 billion cash bid for 21st Century Fox film and television assets,  a day after a federal judge dismissed competitive concerns and ruled that AT&T’s $85 billion acquisition of Time Warner may proceed.

Comcast’s bid is significantly higher than Walt Disney Co.’s $52.4 billion offer. However, a key difference between the offers is that Disney’s involved a stock swap that would give the Fox shareholders about a 25% stake in Disney going forward. Rupert Murdoch, chairman of 21st Century Fox, reportedly favored the stock transaction over Comcast’s one-time buyout offer because it limits tax liabilities in the short term, in addition to the potential for future earnings on the stock.

In a letter to the Fox board, Comcast Chairman and Chief Executive Brian Roberts said, “We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction.”

Comcast already owns NBC Universal. The telecom last month said it planned to make an all-cash offer for the Fox studio and networks, but would wait until a court ruling on the AT&T-Time Warner merger.

Philadelphia-based Comcast also said it would pay Disney the $1.525 billion  fee owed in the event of its Fox deal falling through.

Fox shareholders are slated to vote July 10 on the Disney merger, but Comcast said it wants a deal before that.

Fox assets that are on the table include the 20th Century Fox movie and TV studios, as well as the FX and National Geographic channels; Fox’s 22 regional sports networks; its interests in U.K. satellite TV and Internet provider Sky; and a one-third stake in Hulu, which is currently owned by Comcast, Disney and Fox, each with a 30% interest.

A Disney acquisition of Fox would also return the movie and distribution rights to films based on properties Disney now owns, such as Marvel Comics’ X-Men and Fantastic Four, paving the way for their inclusion in Disney’s lucrative Marvel Cinematic Universe. Fox also owns the perpetual distribution rights to the original Star Wars. In addition, Disney recently expanded its Florida-based Animal Kingdom theme park to include a themed-area based on James Cameron’s “Avatar” franchise, which is Fox IP.

Industry observers expect Disney to make a counter-offer for the Fox assets, which could involve an updated bid that includes a mix of stock and cash.

Hulu Revamps Management, Company Structure

Looking to shake up its internal management structure, Hulu has hired a new chief technology officer, its first chief data officer and realigned the subscription streaming video platform into four operating segments, among other changes.

Notable in the reorganization is the departure of chief content officer Joe Stillerman and Tim Connolly, SVP of partnerships and distribution. Stillerman had been with Hulu for just a year after joining the company from AMC Networks. Also leaving is Ben Smith, SVP, experience, who is retiring in July.

Hulu is conducting a search for a head of the new content partnerships group and is eliminating the CCO position.

“Ben, Tim and Joel have all played a significant role in getting Hulu to the strong position it is in today. They will forever be a part of Hulu’s success story, and we wish them the very best in their next endeavors,” CEO Randy Freer said in a statement.

The company’s original programming and relationships with creators, producers and studios will now operate as a dedicated business function led by SVP of content, Craig Erwich, who reports to Freer at the company’s Santa Monica, Calif.-based headquarters.

Other business segments include technology & product, “subscriber journey,” advertising, data & analytics. All of Hulu’s shared services functions — finance, legal, corporate communications and talent & organization — will continue operating as usual, reporting directly to Freer.

Hulu hired Jaya Kolhatkar, former SVP, global data and analytics platform for Walmart, as chief data officer. Kolhatkar, who begins July 2, will be responsible for elevating Hulu’s customer intelligence, implementing data governance and pushing the SVOD’s decision making based on data.

Dan Phillips, former COO at TiVo, becomes Hulu’s chief technology officer, responsible for aligning the company’s technical and product strategy. Philipps begins today (June 4).

Chief marketing officer Kelly Campbell assumes responsibility for “subscriber journey,” which includes acquisition, engagement and retention, to viewer experience and research, across all of Hulu’s business operations. In addition, this group will now oversee Hulu’s subscriber partnerships, including its relationships with Spotify and Sprint.

The advertising sales group continues to report to Peter Naylor, SVP of ad sales.

Hulu, which last month topped 20 million subscribers, continues to spend big attempting to bridge the gap with Netflix and Amazon Prime Video.

It lost $920 million in 2017 compared to a loss of $531 million in 2016. The fiscal loss is reportedly projected to reach $1.7 billion this year as original content (“The Handmaid’s Tale,” Marvel’s “Runaways,” “Future Man,” and “The Doozers”) spending skyrockets.

The losses are primarily driven by continued investments in programming and marketing by Hulu’s four corporate parents 21st Century Fox, The Walt Disney Co., Comcast and Time Warner.

Sky’s Cycling Dilemma

NEWS ANALYSIS — Chris Froome, racing for the $40 million Team Sky professional cycling team sponsored by the British satellite pay-TV operator, May 27 won his third straight Grand Tour stage race, finishing first overall in the Giro d’Italia (Tour of Italy) that began in Jerusalem and ended three weeks later in Rome.

For Froome, who has won four Tour de France races, in addition to last year’s Vuelta a España (Tour of Spain), victory came May 25 after a jaw-dropping win into Bardonecchia that saw the South African-born rider erase a seemingly insurmountable three-minute, 21-second deficit in the overall standings to take the lead for good.

The win brought back bad memories of American Floyd Landis’ similar performance in 2006 when he overcame a significant time gap to vanquish his Tour de France rivals on the next-to-last stage.

Landis was eventually stripped of the win after testing positive for performance-enhancing drugs — leading to a chain of events that would ultimately bring down his former teammate Lance Armstrong on similar charges.

Froome and Team Sky are supposed to be different than Armstrong’s heavy-handed squads of the early 2000s that pushed systematic doping to the extreme.

Founded in 2010, Team Sky has dominated professional and Olympic track cycling with a mandate of clean racing. It is a bragging right of sorts for corporate parent Sky, which eyes the team’s “inspiration and participation” as grounds for its massive marketing spend.

But it remains to be seen how much longer Sky — which has first-run distribution deals with major Hollywood studios, direct-access to Netflix and includes DVDs with electronic sellthrough purchases on the Sky Store platform — will support the team financially at it sits in the merger crosshairs of The Walt Disney Co., 21st Century Fox (which owns 39% of Sky), and Comcast.

And money is hardly the issue.

Team Sky’s dominance has produced increasing naysayers, who contend its results are due to exploiting loopholes within doping rules.

Indeed, Froome, a well-documented asthmatic, often uses inhalers during competition. But apparent misuse of inhalers contributed to Froome testing positive for illegally high levels of an asthma drug during last year’s Vuelta.

The case is under review by cycling’s governing body. Should Froome be found guilty, he would be suspended and stripped of the Vuelta win, and likely the Giro as well.

Without its marque rider, Sky would probably drop its sponsorship.

But in the meantime, Froome keeps racing. As does Team Sky, whose Columbian rider Bernal Gomez recently won the Tour of California.

“My conscience is clear,” said Froome in Rome.