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

[Rodan75]

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

To be fair, we don't know if there was an agreement behind the scenes. But it would be weird if Fox Disney hadn't taken the opportunity to get a good faith agreement on Hulu and Marvel rights.

 

[AnotherDayAnotherDollar]

To be fair, we don't know if there was an agreement behind the scenes. But it would be weird if Fox Disney hadn't taken the opportunity to get a good faith agreement on Hulu and Marvel rights.

You'd think that would have been communicated at this time. It wasn't. This is what Iger said:

“Along with the net proceeds from the divestiture of the RSNs, the sale of Fox’s Sky holdings will substantially reduce the cost of our overall acquisition and allow us to aggressively invest in building and creating high-quality content for our direct-to-consumer platforms to meet the growing demands of viewers,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company.

https://seekingalpha.com/pr/1728205...ry-fox-s-decision-tender-39-percent-stake-sky

Until we hear otherwise, that's what we have to go with. Fox is tendering their shares for cash.

 

[seascape]

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

That is it as far as Sky goes Disney lowers the amount of money they have to borrow or eliminates the 14 billion in debt they were assuming and get just over 1 billion in cash and also will het the 15 yo 20 bilion in cash for the RSNs. That will mean the total in new debt will be 15 to 20 billion. Comcast will be adding 48 billlion and possibly more if the buy any of the RSNs. This is a great deal for Disney and they can make more deals if they want. Comcast on the other hand needs to reduce their debt and the value of their shate of Hulu has no value to anyone other than AT&T and Disney. They will not get what many here think they will. The best deal they could get in 5 billion for Hulu and other assests Disney wants. Comcast has no negotiating power because Disney doesn't need Comcast's Hulu shares to run and control Hulu.

 

[Rodan75]

You'd think that would have been communicated at this time. It wasn't. This is what Iger said:



https://seekingalpha.com/pr/1728205...ry-fox-s-decision-tender-39-percent-stake-sky

Until we hear otherwise, that's what we have to go with. Fox is tendering their shares for cash.

Oh...I don't think they are getting anything but Cash at this time. I just think that if they didn't get a good faith agreement to negotiate for Hulu then they missed an opportunity. I don't think they would announce that even if they got it...because that deal would be negotiated separately.

 

[AnotherDayAnotherDollar]

Oh...I don't think they are getting anything but Cash at this time. I just think that if they didn't get a good faith agreement to negotiate for Hulu then they missed an opportunity. I don't think they would announce that even if they got it...because that deal would be negotiated separately.

Yes good point. A good faith deal is just that though. If that was reached, there's nothing stopping Roberts and co to back out on selling anything once they close the acquisition of Fox's stake in Sky.

 

[Rodan75]

Yes good point. A good faith deal is just that though. If that was reached, there's nothing stopping Roberts and co to back out on selling anything once they close the acquisition of Fox's stake in Sky.

True. For as much as we make them bitter enemies...they actually do have to work together. Disney is a major content provider, Comcast is a major content delivery system. They both profit off of each others health. Both are smart men who recognize this and will continue to partner and compete as needed.

 

[Ripken10]

So someone do quick math that knows the actual numbers. With the assumption of this sale for cash only, and if the RSNs sold for (lets say 15 billion for arguments sake, since someone said 15 to 20 billion), what is the final "pricetag" that they paid for what is left of Fox.

 

[AnotherDayAnotherDollar]

True. For as much as we make them bitter enemies...they actually do have to work together. Disney is a major content provider, Comcast is a major content delivery system. They both profit off of each others health. Both are smart men who recognize this and will continue to partner and compete as needed.

We'll see. They work together but are competitors. A deal could have been reached for Marvel rights way earlier, but it never was for example. I'll go with the assumption that Disney is just taking the cash and that's it.

So someone do quick math that knows the actual numbers. With the assumption of this sale for cash only, and if the RSNs sold for (lets say 15 billion for arguments sake, since someone said 15 to 20 billion), what is the final "pricetag" that they paid for what is left of Fox.

Assuming nothing else changes:

36+14 - 15 - 15 = 20B in new debt

 

[happycamperuni]

True. For as much as we make them bitter enemies...they actually do have to work together. Disney is a major content provider, Comcast is a major content delivery system. They both profit off of each others health. Both are smart men who recognize this and will continue to partner and compete as needed.

I think we also possibly underestimated that maybe Disney wants Comcast as a partner in Hulu for the short/medium-term at least:

Yes both companies compete vigorously in all content areas, but Hulu is currently burning through cash and in the short term having NBC's content helps sell the service. Maybe when Hulu is more stable in terms of cash flows, we'll see a deal on Hulu. (Or they may just may just make a deal over the next 12-15 months).


Also, even though Disney is taking 60% of Hulu, Hulu's setup gives Comcast a lot of protections: NBC has carriage deals for its content that typically give about as much money to Comcast as Hulu's loses (i.e. from one pocket to the other), and Comcast has 3 board seats on Hulu and some say in how Hulu is run.

So I don't necessarily think that Comcast minds being a junior partner while Hulu is losing a significant amount of money per year. At best it just means that Disney will be giving 2x as much to cover Hulu's losses as Comcast while Hulu is unprofitable.

 

[bartholomr4]

We'll see. They work together but are competitors. A deal could have been reached for Marvel rights way earlier, but it never was for example. I'll go with the assumption that Disney is just taking the cash and that's it.



Assuming nothing else changes:

36+14 - 15 - 15 = 20B in new debt

$74 Billion in Stock and Cash, plus $18.5 Billion in debt equals 92.5 Billion Paid.
Subtract 15 for Sky and you assumed 15 for the RSN's and the cost is 62.5 Billion with debt or 44 Billion without debt.

 

[AnotherDayAnotherDollar]

assumed 15 for the RSN's and the cost is 62.5 Billion with debt or 44 Bil

I'm talking about new debt from the Fox acquisition. I thought it was 36B in cash, 36B in stock + 14B in Fox debt.

 

[marni1971]

Rupert Murdoch ends Sky control with Comcast stake sale http://www.bbc.co.uk/news/business-45654792

 

[bartholomr4]

I'm talking about new debt from the Fox acquisition. I thought it was 36B in cash, 36B in stock + 14B in Fox debt.

Disney will have to absorb 18.5 billion of existing Fox Debt. It is paying in Cash and stock another 74 Billion (which includes the cost of lawyers and bankers). Half of this will be cash and half will be stock. New debt is in the 36 to 37 billion range.

 

[Stripes]

Rupert Murdoch ends Sky control with Comcast stake sale http://www.bbc.co.uk/news/business-45654792

Good news for the parks!

 

[AnotherDayAnotherDollar]

Disney will have to absorb 18.5 billion of existing Fox Debt. It is paying in Cash and stock another 74 Billion (which includes the cost of lawyers and bankers). Half of this will be cash and half will be stock. New debt is in the 36 to 37 billion range.

Where are you getting 18.5B from? I'm pretty it was 14B, but I haven't looked at the SEC filings in awhile.

 

[bartholomr4]

Where are you getting 18.5B from? I'm pretty it was 14B, but I

Page 267 of the Proxy. 21CF Current Borrowings are 18.459 Billion as of the proxy statement date.

 

[Princess Leia]

For those who thought that Disney was going to kill Dark Phoenix with the Fox purchase, the new trailer comes out tonight and the release date is still February 14, 2019.

 

[AnotherDayAnotherDollar]

https://www.nytimes.com/2018/09/26/business/media/sky-comcast-fox-disney.html

But British takeover laws forbid that any deal involving Hulu being contingent on a tit-for-tat maneuver involving Sky. So a transaction for Hulu would have to be made independently.

As @Rodan75 said, it couldn't happen simultaneously. Any trade would have to be done separately.

Also apparently Fox needed to make a decision to post its lower bid for Sky by tomorrow. Tendering now prevents Fox (and Disney) to having to tender at a lower price later. Comcast held the upper hand here if there were to be any negotiation.

 

[Rodan75]

I think we also possibly underestimated that maybe Disney wants Comcast as a partner in Hulu for the short/medium-term at least:

Yes both companies compete vigorously in all content areas, but Hulu is currently burning through cash and in the short term having NBC's content helps sell the service. Maybe when Hulu is more stable in terms of cash flows, we'll see a deal on Hulu. (Or they may just may just make a deal over the next 12-15 months).


Also, even though Disney is taking 60% of Hulu, Hulu's setup gives Comcast a lot of protections: NBC has carriage deals for its content that typically give about as much money to Comcast as Hulu's loses (i.e. from one pocket to the other), and Comcast has 3 board seats on Hulu and some say in how Hulu is run.

So I don't necessarily think that Comcast minds being a junior partner while Hulu is losing a significant amount of money per year. At best it just means that Disney will be giving 2x as much to cover Hulu's losses as Comcast while Hulu is unprofitable.

I think this is a good alternative take. I wonder if they can change the board rules with Disney having control though...currently everyone on the board has the ability to stop any new programming or strategy decision. It isn't a simple majority. That is the weirdness of the current board make up.

 

[Indy_UK]

So do we feel Disney are doing all the right things? Get Fox to sell the 39% and bring their cost of Fox down?

Hopefully Comcast will show good faith and allow Disney any rights they want from Comcast