News Disney and Fox come to terms -- announcement soon; huge IP acquisition

CaptainAmerica

Premium Member
In my opinion the value to Netflix's original content library is actually devaluing itself pretty quickly, because Netflix is aging it rapidly by releasing more content too often.
Yup... They're shooting themselves in the foot with the "binge" programming model. I love Stranger Things, but I can watch the entire series in a weekend. When I'm done with it, there's no reason for me to stick around.
 

Rodan75

Well-Known Member
Yup... They're shooting themselves in the foot with the "binge" programming model. I love Stranger Things, but I can watch the entire series in a weekend. When I'm done with it, there's no reason for me to stick around.

I like their binge mode...and I'm kinda okay with one major thing every week. But they have significantly upped that pace over the last 6 months.
 

AnotherDayAnotherDollar

Well-Known Member
I wonder if they would have more success if they launched the FX+ service internationally instead of Hulu? I guess that would depend on how much of that content is already licensed in other territories.

I do have to wonder if they'll fold FX+ into Hulu. It makes sense and adds value to the service, much like adding Marvel Unlimited to DisneyPlay is value added.

3. You gain more subs by offering each product at a lower price. I'll gladly pay $5 for ESPN+ and $10 for Disney+, but I wouldn't pay $25 for ESPN+Disney+Hulu because I don't care about Hulu.

This is a good point. Say $10 Disney, $10 Hulu, $40 Live Hulu, $5-10 ESPN (there'll be tiers at some point). Get the whole bundle without Live TV for $20-25, or with Live TV for $50. That means they could cater to someone who wants everything and someone who just wants one of the apps.

Making that a seamless and smooth experience though is very hard.

I like their binge mode...and I'm kinda okay with one major thing every week. But they have significantly upped that pace over the last 6 months.

There are pros and cons to binge and weekly releases. Netflix/Amazon do the binge thing and Hulu/HBO do the weekly thing. Both approaches can work, but the problem is quality content as opposed to just dumping stuff there.
 

happycamperuni

Active Member
Because Comcast is overpaying for Sky, Disney should take their 15 billion and force Comcast to take on that additional debt. Comcast will be adding 48 billion in debt according to Bloomberg. Disney is adding about 50 billion but will then have Comcasts 15 billion plus another 15 to 20 billion from the sale of the RSNs. Thus the net new debt will between 15 and 20 billion. Disney will have cash to buy Hulu from Comcast should comcast want to sell but Disney will have the say on the price because they have no legal obligation or need to purchase it. Plus Comcast has indicated they want to see their 30% in Hulu so Disney should listen but insist on other assests they want to be included in any offer. As for paying anything over the 3.5 billion 30% is worth Comcast will have to give up something Disney really wants.
That's why I'd expect Disney to tell Fox to sell most of the Sky shares.

There is no real advantage to Disney to holding Sky shares beyond $3-5 billion worth for a negotiation for that 30% of Hulu that Comcast owns.

So if you're Disney and you're time limited on this 17.28 pounds per share offer (Comcast is now over 30% ownership of Sky as of this morning), then you should take that deal and sell into the offer before Comcast closes the window in early October.

My expectation is that Disney orders Fox to sell 26-28% of Sky out of their 39% stake, and transfer around 11-13% to Disney along with their assets.

That way Disney gets the 17.28 pounds per share price for 26-28% of Sky for around $10-12 billion, and then has 11-13% of Sky ($3-5 billion worth) to negotiate for that 30% of Hulu that Comcast controls.

Once Comcast closes the window in October, they won't be offering that same price, and Disney will have to force Comcast to fork over $10 billion in cash along with the Hulu stake..., why not just grab that cash now without needing a negotiation...
 

Indy_UK

Well-Known Member
Long term, I do think Disney not getting SKY is the best thing. It's outside what they've done before and even if it's not for another 10 years, traditional TV is dwindling especially paid TV when here in the U.K. There's a lot of free TV plus the much cheaper subscription services like netflix
 

Clyde Birdbrain

Unknown Member
Yup... They're shooting themselves in the foot with the "binge" programming model. I love Stranger Things, but I can watch the entire series in a weekend. When I'm done with it, there's no reason for me to stick around.

And as a result they don’t get much publicity either. With weekly episodes of Westworld people discuss what happened and what they think will happen next. That’s not possible with series that get released all at once. You can’t even talk about certain episodes as people don’t want any spoilers until they’ve seen the whole thing.
 

Rodan75

Well-Known Member
That's why I'd expect Disney to tell Fox to sell most of the Sky shares.

There is no real advantage to Disney to holding Sky shares beyond $3-5 billion worth for a negotiation for that 30% of Hulu that Comcast owns.

So if you're Disney and you're time limited on this 17.28 pounds per share offer (Comcast is now over 30% ownership of Sky as of this morning), then you should take that deal and sell into the offer before Comcast closes the window in early October.

My expectation is that Disney orders Fox to sell 26-28% of Sky out of their 39% stake, and transfer around 11-13% to Disney along with their assets.

That way Disney gets the 17.28 pounds per share price for 26-28% of Sky for around $10-12 billion, and then has 11-13% of Sky ($3-5 billion worth) to negotiate for that 30% of Hulu that Comcast controls.

Once Comcast closes the window in October, they won't be offering that same price, and Disney will have to force Comcast to fork over $10 billion in cash along with the Hulu stake..., why not just grab that cash now without needing a negotiation...

There was a CNBC or Seeking Alpha article yesterday that reiterated that Comcast has a vested interest in getting Fox Disney to sell that SKY stake, they won't be able to integrate operations and results until they have full control over the company. Which also helps to bring context to why they offered so much for SKY, they didn't want to see stragglers keep their shares.
 

bartholomr4

Well-Known Member
There was a CNBC or Seeking Alpha article yesterday that reiterated that Comcast has a vested interest in getting Fox Disney to sell that SKY stake, they won't be able to integrate operations and results until they have full control over the company. Which also helps to bring context to why they offered so much for SKY, they didn't want to see stragglers keep their shares.

I saw two regulatory filings from the UK today, which suggests Comcast acquired (at least) another 6 % today.... That gets them to 36% at a minimum which is good progress..... Time is money to the hedge funds.... if we don’t see them get to the 51% mark quickly, you could see holdouts which again make your point all the more relevant.... More leverage for Disney/21CF.
 

JoeCamel

Well-Known Member
There was a CNBC or Seeking Alpha article yesterday that reiterated that Comcast has a vested interest in getting Fox Disney to sell that SKY stake, they won't be able to integrate operations and results until they have full control over the company. Which also helps to bring context to why they offered so much for SKY, they didn't want to see stragglers keep their shares.
Yep, they see the future and the value. It will be much stronger going forward.
 

AnotherDayAnotherDollar

Well-Known Member
I know some folks here say it's impossible and don't want to touch on this subject, but you gotta think that this opportunity to get Hulk, Namor movie rights and Marvel theme park rights from Universal is a one off opportunity. If Disney and Comcast sit down to talk shop regarding Hulu and Sky shares as most analysts are predicting, then Disney must walk away with all the Marvel rights. They will not be able to sniff that for awhile after the deal is signed and the assets are traded IMO.

It seems like Comcast has to get 50% + 1 by Oct 11th and they want to close everything out by the end of October. Disney/Fox will have to decide, but I think they should tender and get a fair amount of rights to their assets and a whole lot of money to deleverage.
 

bartholomr4

Well-Known Member
I know some folks here say it's impossible and don't want to touch on this subject, but you gotta think that this opportunity to get Hulk, Namor movie rights and Marvel theme park rights from Universal is a one off opportunity. If Disney and Comcast sit down to talk shop regarding Hulu and Sky shares as most analysts are predicting, then Disney must walk away with all the Marvel rights. They will not be able to sniff that for awhile after the deal is signed and the assets are traded IMO.

It seems like Comcast has to get 50% + 1 by Oct 11th and they want to close everything out by the end of October. Disney/Fox will have to decide, but I think they should tender and get a fair amount of rights to their assets and a whole lot of money to deleverage.


I think folks want to touch the subject.... I think the discussion is what Disney would pay for those rights and if the cost of reacquisition is “too high” would Disney walk away in lieu of the opportunity to deleverage. Is this something like Waldo (thrown in when NBC took the rights to Sunday Nigt football), or an unreasonable price demanded by Universal. I think you are right on target.....
 

Rodan75

Well-Known Member
Since we're talking about Disney's OTT rival, Netflix... they may have extended their debt to create Netflix Originals, but, it seems they're getting their money's worth...

https://en.wikipedia.org/wiki/List_of_original_programs_distributed_by_Netflix

I’m not sure that is true. It would be interesting to see what their cost per min/hour compared to rev per programmed hour and compare that to the networks and cable channels.

And how does the value of that catalog age. So many questions for Netflix. And sooner or later the analysts and the street will turn on them.

Disney is already getting these questions...and rightfully so. And it appears that Disney will be judged more harshly than Netflix for the same accounting.
 

Indy_UK

Well-Known Member
I aplologise my naivety on the subject.

So SKY are currently run by just a bunch of shareholders. Comcast are now going to them and buying the shares off them for the agreed price. But they need to gain an overall of 51% of the shares for the deal to go through?

They want the whole 100% so Disney could be quids in here, when they sell their 39%?

Do we Think Disney are really going to bring the Hulk and Marvel theme park rights into the conversation? If they do then I do applaud their admiration of getting back every aspect of the brand.
 

bartholomr4

Well-Known Member
I aplologise my naivety on the subject.

So SKY are currently run by just a bunch of shareholders. Comcast are now going to them and buying the shares off them for the agreed price. But they need to gain an overall of 51% of the shares for the deal to go through?

They want the whole 100% so Disney could be quids in here, when they sell their 39%?

Do we Think Disney are really going to bring the Hulk and Marvel theme park rights into the conversation? If they do then I do applaud their admiration of getting back every aspect of the brand.


I believe the negotiations will be serious and professional. To that end, both Disney and Comcast will strategize and go into the discussion with a list. The negotiations will not be "accidental". Both parties will bring "things they would like to have, and things they have to have."

During my education, I have taken a couple of negotiation classes/seminars. I was taught to go in to any negotiation with what is referred to as a "BATNA", or "The Best Alternative To No Agreement". The approach assumes if you can't get your BATNA you walk away. If you are offered anything better than your BATNA, you continue to negotiate for more. In a competitive situation (like last weekend's auction) the winner will be the party who's BATNA yields the greatest return to the owner.

In this strategy, you have to put items on the table which are of interest to the other party, which you will trade away, to get your BATNA (or better).

I am thinking Disney's BATNA does not include the Marvel Theme Park Rights, but I do think the rights are on their list. I am also thinking Comcast would like to stop promoting their biggest competitor's IP and replace it with their own. Comcast is moving to match Disney with Consumer Products licensing, so I believe they want to get the Marvel Properties out of their parks. We are talking about it, so it is reasonable to think the Marvel park rights are on Comcasts list of things they will trade away. Giving Disney the ability to have these characters in their parks east of the Mississippi, while maintaining a runway for them to remove the characters from their parks (say 10 years) is (in my opinion) a no brainer.

Comcast can not consolidate Sky with NBCU without effective control of the Sky Shareholder base. They can force a consolidation of all shares once their ownership gets above some threshold (I think in the US this is around 90% or higher... Not sure what it would be in the UK). Until Comcast reaches this threshold, they are going to "play nice" and will have motivation to encourage the consolidation.

I have read here members say Comcast can make Disney's life miserable with HULU because of the terms of the agreement. At least there is an agreement which addresses how the majority owners play together. Here, where there is no such agreement, If Disney wants, they can hold the 39% and make Comcast pay a huge interest cost for a company they can't consolidate, which is growing at about 6 % a year.

It is fun to speculate here... That's why we are blogging each other.... Thanks for the banter.
 

AnotherDayAnotherDollar

Well-Known Member
I think folks want to touch the subject.... I think the discussion is what Disney would pay for those rights and if the cost of reacquisition is “too high” would Disney walk away in lieu of the opportunity to deleverage. Is this something like Waldo (thrown in when NBC took the rights to Sunday Nigt football), or an unreasonable price demanded by Universal. I think you are right on target.....

I'm going with the premise that reports are saying, "Comcast is open to selling their 30% Hulu interest", "Comcast wants to buy Disney's share in Sky", etc. Yes none of the reports mention Marvel rights or any of the other tangled rights (and honestly why would they? It's rather small comparatively speaking). If Comcast is willing to be reasonable and want to deal regarding Hulu, then I assume the same is true for everything else. They could easily ask for 2-3x what Hulu is really worth, but signs point to that not being the case. You are right though that if they go in saying "1B for theme park rights!" then Disney shouldn't pay that, but they should play hardball to get it. They're not gonna get another chance anytime soon.

What Waldo thing by the way? You mean Oswald? If so, yeah I think it could be something like that.

Do we Think Disney are really going to bring the Hulk and Marvel theme park rights into the conversation? If they do then I do applaud their admiration of getting back every aspect of the brand.

Think about it logically, why wouldn't they? I also think they will bring up the Sky distribution rights for Fox and Disney movies. I think Comcast will bring up the VOD distribution rights that Fox owns. It makes sense to put everything on the table.
 

bartholomr4

Well-Known Member
Comcast said Wednesday that it has increased its stake in Sky to 36.95%, after winning a bidding war for the British media group with a $38.8 billion offer over the weekend.

The U.S. cable giant said it has bought a further 135.9 million shares in Sky at 17.28 pounds ($22.72), the same price as its final bid in the auction for the pay-TV company that British regulators held between the cable company and 21st Century Fox, which was backed by Walt Disney.

Comcast said it now holds 635.4 million Sky shares. On Tuesday, the cable company said its offer has been declared mandatory under U.K. takeover rules, after it bought more than 30% of Sky's share capital.


CNBC is reporting 21st Century Fox will be selling the 39% of Sky to Comcast in the Tender offer at 17.28 per share
 

AnotherDayAnotherDollar

Well-Known Member
Well maybe they'll just tender and get the money and that's that lol.

Twenty-First Century Fox (FOX, FOXA) will sell its 39% ownership in Sky(OTCQX:SKYAY) to Comcast (NASDAQ:CMCSA) at the £17.28/share price that Comcast bid for the rest of the company.

It's that or accepting the Comcast offer on the lapse of its own offer for Sky shares, which will have the same effect of unloading the stake.

Comcast's bid values Fox's Sky holding at £11.63B, or about $15.32B.

Fox backer Disney (NYSE:DIS), which was set to acquire Fox's interest in Sky, is supporting the decision.
 

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