Comcast Prepping Superior Offer for Fox

The Walt Disney Co. and 21st Century Fox may think they have a $52.4 million merger agreement to split off 20th Century Fox Film locked up, but Comcast is hedging shareholders will follow the money.

Comcast May 23 issued a statement that it is finalizing an all-cash (reportedly $60 billion) offer for Fox that bests Disney’s stock-based offer.

“In view of the recent filings with the U.S. Securities and Exchange Commission by The Walt Disney Company and Twenty-First Century Fox, Inc. in preparation for their upcoming shareholder meetings to consider the acquisition of Fox by Disney, Comcast Corporation confirms that it is considering, and is in advanced stages of preparing, an offer for the businesses that Fox has agreed to sell to Disney (which do not include the Fox News Channel, Fox Business Network, Fox Broadcasting Company and certain other assets),” Comcast said in the statement.

Comcast also has a separate $31 billion offer on the table for British satellite TV operator Sky that trumps Fox’s $15 billion bid for outstanding shares of Sky it doesn’t already own.

“The structure and terms of any offer by Comcast, including with respect to both the spin-off of “New Fox” and the regulatory risk provisions and the related termination fee, would be at least as favorable to Fox shareholders as the Disney offer,” said the cable giant.

Comcast reiterated that no final decision has been made, but that “at this point” the work to finance the all-cash offer and make the key regulatory filings is “well advanced.”

Cisco Sells Video Business to Private Equity Group

Cisco Systems is selling its video software business (NDS Group) to private equity firm Permira Funds – reportedly for $1 billion – six years after Permira sold the business to Cisco for $5 billion.

Cisco retains video and media technology related to its core business in networking, multi-cloud, security, data, and collaboration.

Following the close of the transaction, Permira will create a new, rebranded company focused on developing and delivering video services (i.e. interactive content to set-top boxes, DVRs and portable media devices) for the pay-TV industry. Abe Peled, CEO of NDS, will serve as chairman of the new company.

“This is a unique opportunity to lead and shape the video industry during its transition with the flexibility as a private company,” Peled said in a statement. “The new company will have the scale, technology innovation, and world-class team to deliver outstanding go- to-market execution, customer engagement, and new end-user experiences.”

Perhaps wishful thinking as pay-TV operators face increasing consolidation (Time Warner Cable/Charter and DirecTV/AT&T) and subscriber losses to over-the-top video services such as Netflix and Amazon Prime Video.

Paolo Pescatore, VP, multiplay and media, at CCS Insight, contends Cisco’s move reflects a changing media landscape as increasing numbers of consumers switch to alternative home entertainment options such as SVOD.

“There are too many solution providers chasing too few dollars. Bottom line, many of these solutions providers have diversified and now need to focus on core areas,” Pescatore said in a statement reported by Advanced-Television.com. “There will be more casualties due to further disruption. This represents an opportunity for other providers who still focus on connectivity and delivery of video over the Internet.”

 

Judge in AT&T/DOJ Trial Ups Questioning

U.S. District Court Judge Richard Leon April 4 questioned witnesses for the government in the AT&T/Time Warner antitrust trial probing questions about negotiations involving programing distribution.

At the center of the government’s regulatory concern is the contention that a combined AT&T/Time Warner, whose assets include DirecTV, AT&T U-verse, Turner (TNT, CNN, TBS), HBO, Warner Bros., could unfairly leverage content access to pay-TV distributors in favor of its own distribution channels.

With Tom Montemagno, EVP, programing acquisition at Charter Communications, on the stand for the government, Leon asked details about Turner’s revised arbitration rules to pay-TV operators – updated after the DOJ filed the lawsuit – guaranteeing against blackouts and content disruption to consumers in the event of an impasse in license negotiations.

Specifically, Turner’s so-called “blind” arbitration rules enable each side to make an offer with the arbitrator deciding which offer to accept. Distributors such as Charter have expressed concern that a combined AT&T/Time Warner would have an unfair advantage in arbitration since it is party to fiscal information on both sides of the issue.

Under questioning by Leon, Montemagno agreed that a more transparent “mutually beneficial, mutually fair” process would be better for all parties involved.

The matter is significant, reports CNN, as it is reminiscent to 2011 when Leon presided over the antitrust settlement agreement between the DOJ and Comcast, which was acquiring NBC Universal.

In that case, which Leon ruled in favor of Comcast, the judge ordered the cable giant and government to collect data on arbitration cases involving digital distribution services such as Netflix, Hulu and Amazon Prime Video.

“Since neither the court nor the parties has a crystal ball to forecast how this final judgment [Comcast/NBC Universal] … will actually function, I believe that certain additional steps are necessary,” Leon wrote in a memo accompanying his order, according to CNN.

Leon’s skepticism about the arbitration process suggests the judge could either allow the AT&T/Time Warner acquisition to close without conditions, or rule against it unless additional guidelines are put in place. There is no jury in this case.