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.

Lachlan Murdoch to Become Chairman/CEO of New ‘Fox’

Twenty-First Century Fox May 16 revealed the senior management team at the revamped “Fox” once it consummates the asset sale of 20th Century Fox Film Corp. to The Walt Disney Co. (or Comcast).

Current executive chairman Lachlan Murdoch will serve as chairman and CEO of the new company, while his father, Rupert Murdoch, will serve as co-chairman. John Nallen, CFO at 21st Century Fox, will take a broader role as new COO.

No mention of current Fox CEO James Murdoch, who apparently won’t have a role in the new company.

The younger son was seen as more progressive politically than his father and brother. Indeed, James was reportedly embarrassed by ongoing sexual harassment issues at Fox News, and late last year wrote an email criticizing President Trump’s response to the deadly skirmish in Charlottesville, Va., between protesters and white nationalists and alt-right groups that left one woman dead and 19 people injured.

The downsized Fox will feature Fox News Channel, Fox Business Network, Fox Broadcasting Co., Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network.

It will house the top cable news channel in the country, and a stations group in nine of the 10 largest metro areas in the U.S. Its broadcasting and cable sports brands will have long-term sports rights to the NFL, MLB, World Cup soccer and NASCAR.

“We have worked through the winter ‘standing up’ a reimagined independent Fox,” the younger Murdoch said in a statement.

Rupert Murdoch said the revamped company would become the only media company solely focused on the domestic market.

“Focused on what Americans love best – sports, news and entertainment,” he said.

Comcast Makes Formal $31 Billion Bid for Sky

As expected, Comcast Corp. April 25 announced a “pre-conditional superior cash offer” of $31 billion for Sky, the European satellite TV operator headquartered in the U.K. The offer represents a 16% premium on 21st Century Fox’s standing bid for the 61% stake in Sky it does not own.

“We have long believed Sky is an outstanding company and a great fit with Comcast,” Brian Roberts, CEO of Comcast Corp., said in a statement. “Sky has a strong business, excellent customer loyalty, and a valued brand. It is led by a terrific management team who we look forward to working with to build and grow this business.”

Comcast eyes Sky’s 23 million subscribers in the U.K, Italy, and Germany, and history of strong financial performance. Roberts said Sky would help expand Comcast’s international footprint in the U.K. and Western Europe.

“The combined customer base of approximately 52 million will allow us to invest more in original and acquired programming and more in innovation as we strive to deliver a truly differentiated customer experience,” he said.

Comcast, like Fox, said it intends to safeguard Sky’s editorial independence by maintaining fiscal support for Sky News for 10 years, establishing an editorial Sky News board; keeping Sky’s U.K headquarters in Osterley for five years; and not acquiring any majority interest in U.K. newspapers for five years.

In a move aimed at competing with Netflix and Amazon Prime Video in the U.K., Comcast said it would increase investment in U.K. film and TV production and maintain support of Sky’s technology hub in Leeds, among other actions.

Comcast, which owns NBC Universal and DreamWorks Animation in the United States, contends owning Sky would create a media conglomerate better equipped to compete in a rapidly changing and highly competitive industry.

“Together, the companies would be well positioned to drive growth to provide attractive returns to Comcast shareholders and to benefit the employees and customers of both organizations,” Comcast said in a statement.

Indeed, Sky’s board of directors issued an April 25 statement withdrawing its recommendation to shareholders to support Fox’s Dec. 15, 2016 offer. It said it was also terminating the co-operation agreement with Fox – which said it would respond shortly to the Comcast offer.

U.K. Regulator Mandates Disney Into Sky Takeover Offer

The Panel on Takeovers and Mergers, a U.K. regulatory board, April 12 ruled the Walt Disney Co. be forced to match Fox’s $14.4 billion cash offer for British pay-TV service Sky should its $52.4 billion acquisition of select 21st Century Fox assets succeed. Fox currently owns 39% of the satellite TV operator.

The panel mandated Disney pay 10.75 pounds ($15.22) per Sky share, which is equal to Fox’s bid in 2016 for outstanding Sky shares currently held up in regulatory limbo.

Disney, which initially said it wasn’t interested in acquiring the remaining stake in Sky, has agreed to the ruling, according to The Takeover Panel.

While the ruling affords Sky investors a guaranteed Sky buyer should Fox’s bid fail, the markets remain key on Comcast’s Feb. 27 stated desire to bid more than $31 billion for Sky – which represents a 16% premium on the Fox bid. Comcast is also mulling a potential rival offer to Disney for 21st Century Fox assets.

Fox, in a statement, said it remains committed to its cash offer for Sky, which is supported by revised remedies recently offered to the Competition and Markets Authority (CMA) with whom Fox has been co-operating in order to bring the U.K. regulatory process to a “swift and satisfactory” conclusion.