Comcast, in 2nd Try, Offers $65 Billion Cash for 21st Century Fox

Comcast announced an offer worth $65 billion for the bulk of 21st Century Fox’s businesses on Wednesday, setting up a showdown with the Walt Disney Co. for Rupert Murdoch’s media empire.

The all-cash bid by Comcast, the largest cable company in the United States, came a day after a federal judge approved a merger between AT&T and Time Warner. That deal had been challenged by the Justice Department, and Comcast executives had awaited the judge's decision before mounting their bid for 21st Century Fox.

In December, Disney struck a $52.4 billion, all-stock deal for Fox’s assets. Comcast, whose roughly $60 billion offer for the Fox assets was rebuffed last year, is now including contractual assurances such as a reverse breakup fee — worth about $2.5 billion — in the event a transaction is blocked by the government.

At $35 a share, Comcast’s new offer is about 19 percent higher than Disney’s proposal, according to its statement.

Murdoch and his company’s board had rejected Comcast’s earlier offer partly on concerns the government would block the deal. But the AT&T-Time Warner decision also allayed many concerns that a Comcast takeover of 21st Century Fox’s businesses would be blocked by regulators.

Brian L. Roberts, the head of Comcast, needed to move quickly. Fox shareholders are scheduled to vote on the Disney deal on July 10, but that date will be moved back if Murdoch and the Fox board decide to support Comcast’s offer. Disney would then have five days to respond with a counter bid.

Roberts, in a 700-word letter addressed directly to Murdoch and his sons James, the CEO of Fox, and Lachlan, the executive chairman, wrote that he “long admired what the Murdoch family has built,” but that he and his company were “disappointed” by Fox’s decision to engage Disney.

“In light of yesterday’s decision in the AT&T/Time Warner case,” he continued, “we are pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal.”

The businesses Murdoch has agreed to sell include the 20th Century Fox film and TV studios, almost two dozen regional sports networks like the New York Yankees’ YES channel, a lineup of cable networks that includes FX and a 30 percent ownership stake in the streaming service Hulu.

But the key attractions for Comcast are Fox’s broad international assets, which include its 39 percent stake in the European pay TV operator Sky and its control of Star, one of India’s largest media companies, which reaches 700 million people every month, according to the company.

Murdoch’s overseas business accounts for 27 percent of annual sales, about $7.8 billion. Comcast, whose cable business is strictly a domestic operation, draws in only 9 percent of its revenue from foreign agreements, largely through its NBCUniversal division.

Comcast has already made an offer to buy the other 61 percent of Sky in a separate deal. The Fox News cable network, the Fox broadcast stations, the Fox Business Network and the sports network FS1 would not be part of a transaction.

“This has all the makings of a very aggressive bidding war,” said Craig Moffett, co-founder of research firm MoffettNathanson and a longtime media analyst.

There is bad blood between Disney and Comcast. The rancor stretches back to at least 2004, when Comcast tried to swallow Disney. The Disney board fought off that attempt, but chief executive Robert A. Iger and his top lieutenants have never forgotten it. Anyone riding the Jurassic Park rides at NBCUniversal’s theme parks can see what Comcast thinks of Mickey Mouse; one of Disney’s famous mouse ear hats floats in the water next to a raft that has been destroyed by a marauding dinosaur.

That failed deal looms over the current fight for Fox.

“Comcast seems hellbent on winning this time, and I think the narrative in Philadelphia is that Brian should have listened to his gut in 2004 and bought Disney,” Moffett said, referring to Comcast’s headquarters. “He seems very personally committed to this.”