Why Comcast wants Fox: Catching up with Netflix, expanding to Europe

Media giant Comcast countered Disney this week for control of Twenty-First Century Fox’s entertainment properties. In December, Fox agreed to sell those properties to Disney in a $52.4 billion all-stock offer. But this week, Comcast put up a $65 billion hostile cash bid for Fox’s assets — the first salvo in what could become a bidding war for a leading role in the worldwide media market. Here’s what’s at stake for Comcast, Disney, and the entertainment industry.

JOSE F. MORENO / Staff Photographer
Comcast Technology Center building

On the block

Last year, aging Fox founder Rupert Murdoch decided to split 21st Century Fox and sell off most of its entertainment holdings, but retain Fox News, Fox Business Network, and Fox broadcast TV networks. With international holdings Sky TV and Star up for grabs, the world media market has been put in play. Fox’s share in Hulu is a prize in the expanding direct-to-consumer streaming market, currently led by Netflix.

FOX ASSETS UP FOR GRABS

MOVIES

TV

FOX’S SHARE IN:

Twentieth Century Fox

Fox Searchlight Pictures

Fox 2000

Twentieth Century Fox Television

FX Productions

Fox21

FX Networks

National Geographic Partners

Fox Sports Regional Networks

Fox Networks Group International

Star India

30 percent of Hulu — Streaming media provider

39 percent of Sky (23 million subscribers in Europe)

Tata Sky

Endemol Shine Group

Fox Networks International (350 channels in 170 countries)

Star (720 million viewers in more than 100 countries)

FOX ASSETS UP FOR GRABS

MOVIES

Twentieth Century Fox

Fox Searchlight Pictures

Fox 2000

TV

Twentieth Century Fox Television

FX Productions

Fox21

FX Networks

National Geographic Partners

Fox Sports Regional Networks

Fox Networks Group International

Star India

FOX’S SHARE IN:

30 percent of Hulu — Streaming media provider

39 percent of Sky (23 million subscribers in Europe)

Tata Sky

Endemol Shine Group

Fox Networks International (350 channels in 170 countries)

Star (720 million viewers in more than 100 countries)

The players

Media giant Comcast boasts 22 million cable subscribers and 25 million broadband users — the largest in both categories for the U.S. market. Disney’s holdings have expanded well beyond the scope of Walt’s cartoon menagerie.

DISNEY

COMCAST

2017 numbers:

Revenue

Net income

2017 numbers:

Revenue

Net income

$55.1 billion

$8.98 billion

$84.5 billion

$22.7 billion

TV

TV

ABC television network

ESPN cable sports network

Disney cable network

30 percent share in Hulu

NBC television network

NBC Studios

Universal Television

CNBC

USA Network

SyFy Channel

Golf Channel

NBC Sports

30 percent share in Hulu

MOVIES

MOVIES

Disney

Pixar

Marvel

Lucasfilm Star Wars franchise

Universal Movie Studio

PROPERTIES

PROPERTIES

Disney theme parks In the U.S., Europe and Asia

Disney Cruise Lines

Philadelphia Flyers

Comcast Spectacor

Theme parks in Orlando, Hollywood, and Japan

COMCAST

2017 numbers:

Revenue $55.1 billion

Net income $8.98 billion

TV

NBC television network

NBC Studios

Universal Television

CNBC

USA Network

SyFy Channel

Golf Channel

NBC Sports

MOVIES

Universal Movie Studio

PROPERTIES

Philadelphia Flyers

Comcast Spectacor

Theme parks in Orlando, Hollywood, and Japan

DISNEY

2017 numbers:

Revenue $84.5 billion

Net income $22.7 billion

TV

ABC television network

ESPN cable sports network

Disney cable network

30 percent share in Hulu

MOVIES

Disney

Pixar

Marvel

Lucasfilm Star Wars franchise

PROPERTIES

Disney theme parks In the U.S., Europe and Asia

Disney Cruise Lines

The moves

In December, Disney made a $52.4 billion deal to buy the parts of Fox Murdoch wants to sell, including a 39% stake in Sky. The deal is a stock transaction, meaning Fox shareholders would receive the equivalent of $52.4 billion in Disney stock.

$52.4

BILLION

IN STOCK

Comcast first made an unsolicited $31 billion cash bid in April for all of British network, Sky TV, which carved it off the Disney deal, triggering a bidding war. But after this week’s federal court ruling clearing the way for AT&T’s $85 billion merger with Time Warner, Comcast concluded that regulators would not interfere with a larger deal, and offered $65 billion in cash for all of the Fox properties for sale.

$31

BILLION

NEW BID

$65

BILLION

How will it end? Comcast and Disney could carve up Fox, or one winner could take it all.

In December, Disney made a $52.4 billion deal to buy the parts of Fox Murdoch wants to sell, including a 39% stake in Sky. The deal is a stock transaction, meaning Fox

shareholders would receive the

equivalent of $52.4 billion in Disney stock.

$52.4

BILLION

IN STOCK

Comcast first made an unsolicited $31 billion cash bid in April for all of British network, Sky TV, which carved it off the Disney deal, triggering a bidding war. But after this week’s federal court ruling clearing the way for AT&T’s $85 billion merger with Time Warner, Comcast concluded that regulators would not interfere with a larger deal, and offered $65 billion in cash for all of the Fox properties for sale.

$31

BILLION

NEW BID

$65

BILLION

How will it end? Comcast and Disney could carve up Fox, or one winner could take it all.

What's at stake

WORLDWIDE REACH

Gaining international networks Sky, Star and Fox International Networks would make the winner the world’s largest pay-TV operator (that is not owned by the Chinese government.) Comcast hopes to triple its 9% overseas revenue with Fox acquisitions.

STREAMING CONTENT

The growth of the streaming direct-to-consumer model is illustrated by Netflix, which went from from fewer than 30 million subscribers in 2012 to over 120 million now, and half of them are outside the United States. Disney covets Fox’s share in Hulu, and getting a majority share (buying Fox would give it 60 percent of Hulu) would bring it a vast base of worldwide subscribers. Comcast would thwart Disney by acquiring Fox’s Hulu share. Sky’s European streaming service could become an alternative to Netflix.

CONTENT CREATION

With a larger subscriber base, the high costs of content creation can be spread out, and provide a global platform for distributing exclusive content, as well as a leg up for negotiating global sports rights deals for the NFL or soccer’s Premier League.

WORLDWIDE REACH

Gaining international networks Sky, Star and Fox International Networks would make the winner the world’s largest pay-TV operator (that is not owned by the Chinese government.) Comcast hopes to triple its 9% overseas revenue with Fox acquisitions.

STREAMING CONTENT

The growth of the streaming direct-to-consumer model is illustrated by Netflix, which went from from fewer than 30 million subscribers in 2012 to over 120 million now, and half of them are outside the United States. Disney covets Fox’s share in Hulu, and getting a majority share (buying Fox would give it 60 percent of Hulu) would bring it a vast base of worldwide subscribers. Comcast would thwart Disney by acquiring Fox’s Hulu share. Sky’s European streaming service could become an alternative to Netflix.

CONTENT CREATION

With a larger subscriber base, the high costs of content creation can be spread out, and provide a global platform for distributing exclusive content, as well as a leg up for negotiating global sports rights deals for the NFL or soccer’s Premier League.

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