Comcast Corporation (Nasdaq: CMCSA) is reportedly negotiating with Twenty-First Century Fox Inc (FOXA) to acquire Fox’s international assets, movie studio, and cable and regional sports networks. According to the Wall Street Journal, the talks are active, but a deal is not imminent.
Comcast is reportedly interested in the same assets that Walt Disney Co. (DIS) has been negotiating for. Dow Jones has reported that Verizon Communications (VZ) is also interested in Fox assets. The Comcast negotiations reportedly do not involve Fox News, Fox Business or the FSI sports channel.
Any deals among the three media giants face the possibility of intense regulatory scrutiny. Earlier this month, the Department of Justice said AT&T (T) must divest either CNN or DirecTV to avoid antitrust action against its proposed merger with Time Warner (TWX).
The potential for a bidding war among Disney, Verizon and Comcast is good news for Fox investors, but only if one of the three can manage to complete a deal.
Rosenblatt Securities analyst Alan Gould says Hulu may be the single most important piece of Fox’s pie as Disney and Comcast look to compete with streaming services from Netflix (NFLX) and Amazon.com (AMZN).
Comcast currently holds a 30 percent ownership stake in Hulu. Acquiring Fox’s 30 percent stake would give Comcast a majority holding. Disney, which also holds a 30 percent ownership stake in Hulu, is in the same position.
Gould says the Fox negotiations are a clear sign that more media consolidation is on the way. “Clearly scale is becoming more important as the media companies are competing against the much larger, and much more global, internet companies,” Gould says. He says the Fox negotiations could spark buyout interest in CBS Corp. (NYSE: CBS), Lions Gate Entertainment Corp. or even the studio assets of Sony Corp. (SNE).
For now, he says, all eyes in the media space will be on the AT&T and Time Warner merger, which Rosenblatt expects the DOJ will attempt to block. “The result of that case will clearly impact future M&A in the media space,” Gould says.
Fox shares jumped…
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