JoeCamel
Well-Known Member
Or they knew they couldn't win
Without being able to do a cash plus stock deal maybe Bob was told he couldn't take on that much more debt
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News Disney and Fox come to terms -- announcement soon; huge IP acquisition
- Thread starter ohioguy
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Without being able to do a cash plus stock deal maybe Bob was told he couldn't take on that much more debt
Rodan75
Well-Known Member
I know, which us why I called it ‘Play’ vs Play.
. It works as a placeholder better than DisneyFlix
CaptainAmerica
Premium Member
My money is on Disney+.I know, which us why I called if ‘Play’ vs Play.
Disney wanted Sky for their subscribers and to boost their distribution power in Europe. This was a major part of their calculus in the 21CF acquisition. They now have nothing there. Comcast made them pay more for 21CF and they didn’t event wind up with part of what they wanted froM 21CF. Big loss for TWDC.
bartholomr4
Well-Known Member
Feals like Iger baited Roberts into Paying way to much..... Today's work yielded Disney Fox (high level estimate) an additional $4.428 Billion if they choose to sell/Tender the 39% of Sky to Comcast. Not a bad day's work.
happycamperuni
Active Member
I do think Disney's balance sheet is part of why Iger held back here.
If Comcast never came through with an offer on the Fox assets, Disney would willingly take on the extra $25-30 billion in debt for all of Sky (remaining 61% for around $15-20 billion and $10.3 billion in Sky's debt).
Switching from an all stock offer for Fox's assets with $0 cash to a half-cash offer with $36 billion in cash on the table seems to have shifted a lot of the calculus for Disney.
CaptainAmerica
Premium Member
Disney doesn't care about Sky's distribution. Their entire bet is based on selling content direct to consumer over broadband. They don't need legacy cable distribution networks to do that.
To quote Bob Iger, Disney sees Sky as "a real crown jewel." In their distribution growth strategy.
CaptainAmerica
Premium Member
Bob Iger lied to get Brian Roberts to overpay. It worked.
You do know that what you described is exactly what Sky is a leader in, in the U.K. and several large European market right?
Uh huh and your proof of this is??? Oh I know you saying so, so that makes it true.
CaptainAmerica
Premium Member
Disney doesn't need to own the pipes. That's like saying Netflix should buy AT&T. No. Users pay Netflix for content, not for distribution. Let the dinosaurs of a dying industry fight over the distribution infrastructure until the 5G wireless network makes them all obsolete.
happycamperuni
Active Member
Overpay is in the eye of the beholder:
Disney's original offer for Fox's assets was $52 billion in stock (and assumption of $14 billion in debt).
Disney's revised offer for Fox's assets was $36 billion in stock, $36 billion in cash (and assumption of $14 billion in debt).
Disney's offer for Sky at 15.67 pounds values it at $35.2 billion. Comcast's offer for Sky at 17.28 pounds values it at $38.8 billion.
So yes, Disney has forced Comcast to "overpay" to the tune of $3.6 billion if they get the whole thing (you could argue $5-6 billion over an offer without a bidding war).
But conversely, Disney is taking on an extra $36 billion in debt because Comcast forced them to increase their overall offer by $20 billion and increase the cash portion by a much larger $36 billion (by exchanging stock for cash)...
It's pretty clear that Disney was forced to overpay more than Comcast on a relative basis. But both are probably happy with how it played out; they each stuck a rival with billions in extra debt while getting the assets they coveted most.
Sometimes you can have both companies overpay but still walk away reasonably happy with the outcome. That's what happened here.
Disney's original offer for Fox's assets was $52 billion in stock (and assumption of $14 billion in debt).
Disney's revised offer for Fox's assets was $36 billion in stock, $36 billion in cash (and assumption of $14 billion in debt).
Disney's offer for Sky at 15.67 pounds values it at $35.2 billion. Comcast's offer for Sky at 17.28 pounds values it at $38.8 billion.
So yes, Disney has forced Comcast to "overpay" to the tune of $3.6 billion if they get the whole thing (you could argue $5-6 billion over an offer without a bidding war).
But conversely, Disney is taking on an extra $36 billion in debt because Comcast forced them to increase their overall offer by $20 billion and increase the cash portion by a much larger $36 billion (by exchanging stock for cash)...
It's pretty clear that Disney was forced to overpay more than Comcast on a relative basis. But both are probably happy with how it played out; they each stuck a rival with billions in extra debt while getting the assets they coveted most.
Sometimes you can have both companies overpay but still walk away reasonably happy with the outcome. That's what happened here.
Rodan75
Well-Known Member
I feel like that comment was always intended for Roberts. Comcast was always supposed to chase SKY. Roberts wasn’t expected to play for the rest of Fox.
Edit to add. This game was always a multi-dimensional chess game. We don’t know everyone’s true intentions at every step.
My feeling is that Murdoch and Iger purposely intended Comcast to chase SKY as a consolation prize. Roberts decided to make that strategy a bit more painful by genuinely going after Fox. Best case they won. Worst case they increased the price tag for Disney.
At this stage both ended up paying more for the assets they wanted, with some new loose ends to tie up.
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happycamperuni
Active Member
Sky's plan is follow what DirecTV is doing in shifting from satellite to OTT with DirecTV Now or what Dish is doing in shifting from satellite to Sling; the Sky leadership wants to gradually shift Sky to being OTT without a satellite.
In some sense, Sky will be Comcast's long-term competitor to Disney's OTT offering in Europe. That's going to be a reality.
Comcast needed Sky more though because Comcast doesn't really have the content needed to create a completely new OTT offering.
Disney has the content to go OTT into Europe without Sky. Hence, Comcast's much larger bid.
bartholomr4
Well-Known Member
Next step will be the negotiations for the 39% Tender..... This is where the real horse trading will go on for Hulu, Marvel rights, the 3 or 4 Fox Sports Channels Comcast may be interested in, etc..... Wonder if Disney's cost in these trades will be more than the $4.43 Billion in increased price they extracted today....
CaptainAmerica
Premium Member
Sky's OTT bundle will still look and feel an awful lot like the legacy bundles, just slimmer and delivered via broadband. But they're still just packagers of other people's content. There's a huge difference between an OTT multichannel bundle and a true DTC product.
Well he certainly fooled Iger by making them pay a premium for 21CF beyond their initial offer which was agreed upon.... Sky fit synergisticly into their distribution growth strategy. Now Comcast has a significant leg up on the competition in Europe.
Rodan75
Well-Known Member
I don’t know the U.K. rules. But I suspect that they can’t negotiate further directly for that 39% since all shareholders have to be compensated equally. My guess is that Disney holds the 39% until all transactions are complete. Whenever it is legally okay to negotiate they will do the horse trading you mention. Just as multiple chained transactions. No even swaps.
VJ
Well-Known Member
The Disney streaming service is known as DisneyLife in the UK... and includes music and ebooks as well as movies and TV shows. I've been expecting Disney to follow a similar sort of branding/content structure for the US service but we'll see.