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

[Sirwalterraleigh]

Moody's is ready to lower Comcasts rating from A3 down. That means higher interest rates. Plus if Disney says they will guarantee the 32.50 a share by paying cash for whatever the difference is on closing, then Comcast will have to go higher. Disney has the advantage here as they are offering cash. Comcast's Board has to look after all shareholders and clearly this is a a terrible deal for them. It's just that one person with too much power wants his way. The CBS case in Delaware will open Comcast to litigation. I hope Comcast Stockholders wake up and someone starts a lawsuit. Of course as I said before I would like nothing better than Comcast to have to pay 4 billion for nothing. That is the cost of your 3rd gate.

Lehman and bear sterns were rated A1 by Moody’s in 2006

 

[Stripes]

lol...you’re one of those youngin’ literal types, huh?

It was started by the Roberts family and since they control 33% of a huge company...that makes them the ad hoc controlling block. But it is a public company.

Seriously...how old are you and why do you not embrace humor?

These things are starting to really matter around here...

I'm younger than you, assuming you're 40. I embrace humor, I like to think I'm pretty good at it

Lehman and bear sterns were rated A1 by Moody’s in 2006

Yep. But, credit rating directly affects borrowing rates. Another reason Disney has a more favorable balance sheet is their debt to equity ratio compared to Comcast's. Not to say either is bad, but Disney's is better than Comcast's.

 

[Sirwalterraleigh]

I'm younger than you, assuming you're 40. I embrace humor, I like to think I'm pretty good at it

Yep. But, credit rating directly affects borrowing rates. Another reason Disney has a more favorable balance sheet is their debt to equity ratio compared to Comcast's. Not to say either is bad, but Disney's is better than Comcast's.

I’m gonna get you in a seminar about that humor thing....

As far as Comcast’s bid goes... we don’t know yet what their game is...

But in what universe would a unilateral decision be made to take a much lower bid with no haggle? This is the part where disney ain’t as big a deal as they say on the disboards...really it isn’t.

We shall see if the next move is made with the knight or the bishop. From a brief scan of the financial and tech times...they are judging Comcast to be a big problem here. And they’re above my pay grade.

 

[Dutch Inn '76]

IMO the lines suck pretty much everywhere, so any additional attractions would help... and a new park would certainly add more attractions. As a consumer I want more things to see and do wherever they are, and if I had to choose between closing old rides for refurb or getting new ones in a 5th gate, my preference would be the latter. I can see why Disney doesn't want to do it because they won't get a ton of additional guest without using the time stone and changing that Marvel Deal with Universal so they could open a Marvel thrill park full of coasters and pull back some people who tend to go to other theme parks more often.

I understand that; more choices is good for any consumer. Personally, I'm just tired of walking around Epcot's Future World and DHS and remembering the good ol' days for those two formerly great parks. In my opinion, it's poor showmanship, poor engineering, poor supply chain - you name it, to have one park so thoroughly built (MK) and attracting a huge number of guests, while two or three other parks sit nearby with half the crowd. It. Just. Doesn't. Make. Sense. Not to the customer, and certainly not to the owner.

 

[Stripes]

I’m gonna get you in a seminar about that humor thing....

As far as Comcast’s bid goes... we don’t know yet what their game is...

But in what universe would a unilateral decision be made to take a much lower bid with no haggle? This is the part where disney ain’t as big a deal as they say on the disboards...really it isn’t.

We shall see if the next move is made with the knight or the bishop. From a brief scan of the financial and tech times...they are judging Comcast to be a big problem here. And they’re above my pay grade.

Nope we don't. I just wouldn't assume Disney is going to sit back and take it. When word initially came out that Comcast was considering making another offer, there was also word that Disney was already preparing to top Comcast's bid. I expect to see a bidding war, and an eventual Disney victory.

 

[Sirwalterraleigh]

Nope we don't. I just wouldn't assume Disney is going to sit back and take it. When word initially came out that Comcast was considering making another offer, there was also word that Disney was already preparing to top Comcast's bid. I expect to see a bidding war, and an eventual Disney victory.

It would be very unusual for bob to go up by tens of billions.

He might have overpaid slightly for Pixar...but combined with his other “crown jewel” purchases he’s still only done a total fraction of what this will take...

Unless...as some of us have been saying...he is just looking for pub and a bump and doesn’t give a crap what happens down the road...

 

[Stripes]

It would be very unusual for bob to go up by tens of billions.

He might have overpaid slightly for Pixar...but combined with his other “crown jewel” purchases he’s still only done a total fraction of what this will take...

Unless...as some of us have been saying...he is just looking for pub and a bump and doesn’t give a crap what happens down the road...

We really have no prior knowledge of how Iger competes in a bidding war. So what he does is anybody's guess. But, a few connected analysts indicate that he's not going to let these assets go.

 

[Lensman]

Lehman and bear sterns were rated A1 by Moody’s in 2006

I think that's a straw man fallacy in that the fact that both Lehman and Bear Stearns were mis-rated by Moody's doesn't mean that TWDC doesn't have a stronger balance sheet than Comcast, it means that either:
1. Something happened very quickly to change their financials such that they because insolvent very quickly. This was certainly the case.
2. Their auditors could have made a mistake in their audited financials, causing the ratings agencies to mis-rate them. This is also arguably the case.

If you're going to refute the argument that Disney has a stronger balance sheet than Comcast, you should look at it and compare the standard measures of balance sheet strength like their current ratio, debt ratio, or debt-to-equity ratio. Or, if you want a shortcut, just look at the credit rating. Oh wait...

[I hesitate to step in, but again I don't want novices reading this thread to get the wrong idea about the basics of financial analysis]

 

[Sirwalterraleigh]

I think that's a straw man fallacy in that the fact that both Lehman and Bear Stearns were mis-rated by Moody's doesn't mean that TWDC doesn't have a stronger balance sheet than Comcast, it means that either:
1. Something happened very quickly to change their financials such that they because insolvent very quickly. This was certainly the case.
2. Their auditors could have made a mistake in their audited financials, causing the ratings agencies to mis-rate them. This is also arguably the case.

If you're going to refute the argument that Disney has a stronger balance sheet than Comcast, you should look at it and compare the standard measures of balance sheet strength like their current ratio, debt ratio, or debt-to-equity ratio. Or, if you want a shortcut, just look at the credit rating. Oh wait...

[I hesitate to step in, but again I don't want novices reading this thread to get the wrong idea about the basics of financial analysis]

I’m not making that argument at all...

I’m stating a fact: don’t trust the greedy at any time


...as far as Comcast goes...the disneyfiles here are making it seem as though they are in imminent collapse...which of course feeds an omnipresent pro-disney line of thinking.

(If somebody wanted to learn finances...would you recommend they do it here? The only place worse I can think of is the university of Chicago)

 

[seascape]

I’m not making that argument at all...

I’m stating a fact: don’t trust the greedy at any time


...as far as Comcast goes...the disneyfiles here are making it seem as though they are in imminent collapse...which of course feeds an omnipresent pro-disney line of thinking.

(If somebody wanted to learn finances...would you recommend they do it here? The only place worse I can think of is the university of Chicago)

You had a strong point on where not to learn finance and economics until you insulted one of the finest University in the history of the country for finance and economics.

 

[Lensman]

(If somebody wanted to learn finances...would you recommend they do it here? The only place worse I can think of is the university of Chicago)

Another straw man argument. In fact, I am not suggesting that anyone come hear to learn finance. I am just trying to make sure that those who aren't well read in finance aren't misled by the most egregious examples of misinformation about financial principles.

By that straw man argument, readers of this forum should expect complete garbage about every subject except for rumors about WDW, since we don't purport to educate anyone about anything except for WDW rumors. And that, my friend, is a ridiculous argument. I think it's actually the reductio ad absurdum special case of straw man where you take a reasonable position (wanting to correct some misinformation) and attack it by stretching that position to an absurd conclusion (equating a small correction with trying to gain an education in the subject) and then allege to have disproved the original assertion by disproving the stretched absurdity. In fact all it proves is the weakness of one's dialectic.

Please stop. It's not constructive and only serves to alienate the community here.

And no, I don't believe that anyone should come to this forum for an education in logic and logical fallacies.

But let's get back to the relative strength of TWDC and Comcast balance sheets. And I think we should pay attention to comparing the hypothetical balance sheets should each of the proposed deals completes. In particular, it's probably worth analyzing the combined Comcast-Fox entity's ability to support the additional $60bn in debt issued. Because we shouldn't just accept the assertion that Comcast wouldn't be able to support this debt burden after the merger, we should back it up with numbers and ratios.

 

[Sirwalterraleigh]

You had a strong point on where not to learn finance and economics until you insulted one of the finest University in the history of the country for finance and economics.

You mean the one favored by third world juntas to destabilize countries?

To say nothing of finding new creative ways to use soccer stadiums

...I’m more of a Princeton cat

 

[seascape]

You mean the one favored by third world juntas to destabilize countries?

To say nothing of finding new creative ways to use soccer stadiums

...I’m more of a Princeton cat

Princeton is where James Baker went.

 

[Sirwalterraleigh]

Princeton is where James Baker went.

The keepers of the Keynesian Torch...with some notable outliers...

Ok, back...what was the topic again??

 

[happycamperuni]

As far as corporate balance sheets go, both Disney and Comcast have strong balance sheets at the current moment.

Naturally, if Comcast succeeds at buying the Fox assets and Sky for somewhere around $100 billion (including assumed debt), then their balance sheet will be somewhat stretched.

They'll be looking at total debt of around $164 billion with EBITDA of $40 billion per year.

Currently they have total debt of around $64 billion with EBITDA of $28 billion per year.

I definitely think Comcast has to be careful about taking on $100 billion in debt for assets that generate an extra $12 billion in EBITDA. But given that Fox's assets are fairly unique (Sky, 30% of Hulu that gives majority control, Star India, their RSNs), it's harder to imagine how Comcast competes on a global scale without those assets.

Disney probably has an easier time of competing without those assets. They already have a strategy for creating global streaming services and are going to pursue that either way.

Would Disney be more successful with the Fox assets and Sky? Sure. Comcast is probably much more desperate though in the sense that they don't have as strong content as Disney does. Either way the next few months will be fascinating.

 

[mikejs78]

as far as Comcast goes...the disneyfiles here are making it seem as though they are in imminent collapse...which of course feeds an omnipresent pro-disney line of thinking.

No one is saying this. You are conflating what people are saying here. I specifically stated that Comcast has a lot of long term business risk due to the potential disruption of 5G and cord cutters. It is undenyable that cable TV subscriptions are declining. From a technology perspective, it is also somewhat likely that 5G will be able to meet or surpass the performance and reliability characteristics of broadband internet. One can logically see how this plays out - for the first time cable cos may have their primay market in sharp decline (TV) and their backup market (Internet) facing competion and preventing their monopoly status, which they've always used to keep prices artificially high.

These are real risks to Comcast's core business over the next 5-10 years. This isn't "imminent collapse" but rather my reading of the industry based on current trends and my knowledge of the technology that is imminent and could be potentially disruptive. Rather than trying ad hominems ("disneyfiles"), can you argue against the merits of what I'm suggesting?

 

[Sirwalterraleigh]

No one is saying this. You are conflating what people are saying here. I specifically stated that Comcast has a lot of long term business risk due to the potential disruption of 5G and cord cutters. It is undenyable that cable TV subscriptions are declining. From a technology perspective, it is also somewhat likely that 5G will be able to meet or surpass the performance and reliability characteristics of broadband internet. One can logically see how this plays out - for the first time cable cos may have their primay market in sharp decline (TV) and their backup market (Internet) facing competion and preventing their monopoly status, which they've always used to keep prices artificially high.

These are real risks to Comcast's core business over the next 5-10 years. This isn't "imminent collapse" but rather my reading of the industry based on current trends and my knowledge of the technology that is imminent and could be potentially disruptive. Rather than trying ad hominems ("disneyfiles"), can you argue against the merits of what I'm suggesting?

More money is still the “better bid”...no matter what chapter 5 says. The buyout is contingent on the stock owners accepting...do they really care about Comcast’s credit rating?

That’s assuming this is a cash transaction? Is this a stock deal?

 

[mikejs78]

More money is still the “better bid”...no matter what chapter 5 says. The buyout is contingent on the stock owners accepting...do they really care about Comcast’s credit rating?

That’s assuming this is a cash transaction? Is this a stock deal?

That's not what I was debating at the time. Inwas debating the relative longterm outlook of Disney v Comcast.

But any case: more money is not necessarily the better bid. There are tradeoffs between a cash and a stock transaction. Correct on the buyout being contingent on stock owners accepting, and Comcast's debt has little meaning to them, but it does have importance to Comcast's shareholders, their stock, and long term solvancy of the company and ability to invest in current businesses. This may, for example, end up curtailing plans for Universal's 3rd or 4th gate in Orlando...

 

[Sirwalterraleigh]

That's not what I was debating at the time. Inwas debating the relative longterm outlook of Disney v Comcast.

But any case: more money is not necessarily the better bid. There are tradeoffs between a cash and a stock transaction. Correct on the buyout being contingent on stock owners accepting, and Comcast's debt has little meaning to them, but it does have importance to Comcast's shareholders, their stock, and long term solvancy of the company and ability to invest in current businesses. This may, for example, end up curtailing plans for Universal's 3rd or 4th gate in Orlando...

I don’t actually think we disagree at all...the deal is nearly to the handshake phase.

I think the reality is that Disney is gonna have to go way up to outflank a much larger (if worse long term) Comcast price offer...

I just don’t know how comfortable bob is to do it. If they hadn’t rode the donkey till it collapses and already had a viable streaming service established, how much more attractive would that content be at a higher price?

Hindsight...I guess.

 

[mikejs78]

I don’t actually think we disagree at all...the deal is nearly to the handshake phase.

I think the reality is that Disney is gonna have to go way up to outflank a much larger (if worse long term) Comcast price offer...

I just don’t know how comfortable bob is to do it. If they hadn’t rode the donkey till it collapses and already had a viable streaming service established, how much more attractive would that content be at a higher price?

Hindsight...I guess.

There are benefits to a stock offer vs a cash offer (potential future gains of the merged co, taxes, etc). I don't think Disney has to match Comcast's bid, but they will likely need to go up.

I think Iger will counter, but he probably has his own ceiling and won't get into a protracted bidding war. In any case, Fox (Comcast) owes Disney a decent amount of money if the deal doesn't go through. So there may come a point where Iger says that the cash is a better bet to use for investment than the purchase, if the price gets too steep.