The media merger wars are on. Next up: Comcast’s bid to undercut Disney’s purchase of Fox.

The merger wars are on.

Comcast, which owns NBCUniversal*, announced today it made a surprise $31 billion bid for European pay TV company Sky.

What’s more interesting is how that could end up spoiling Disney’s $52 billion deal to buy a significant chunk of Rupert Murdoch’s 21st Century Fox — which ultimately includes Murdoch’s offer to buy out Sky.

Led by CEO Brian Roberts, Comcast’s price for Sky is 16 percent higher than Murdoch’s deal, an offer that is still undergoing regulatory review.

That matters to Disney, since its interest in Fox’s business is partly about gaining Fox’s international assets. Fox already owns 39 percent of Sky, as well as a big chunk of Star, a pay TV service in India.

The reason Sky is key has to do with the media business more broadly — fewer people are paying for TV and the TV subscriber base underpins the entire media industry. Disney and Comcast and Fox (as well as CBS and Viacom and Discovery) get a cut of the monthly fees that distributors collect from subscribers, as well as the advertising it sells to that audience. If fewer people are paying for TV, fewer people are watching TV, meaning less in fees and advertising.

To be in the media business now is a zero-sum game since there’s little more room to grow in the U.S. That’s why the merger landscape has turned into a fight for assets. Disney CEO Bob Iger, Fox’s Murdoch and Comcast’s Roberts are in a face-off for the few businesses remaining that will help their companies grow as Netflix and Google and Facebook steal audiences.

“In a world where you’re getting into competition with Amazon, Google and Facebook, having scale” is necessary, Roberts told the Wall Street Journal about the deal.

Comcast had been interested in Fox’s international business for a while, and, according to sources, it offered a richer deal than Disney. Murdoch was concerned Comcast would have a harder time passing a review from U.S. agencies. The Justice Department had already sued to block AT&T’s proposed merger for Time Warner, citing, in part, what it considered Comcast’s violation of conditions it agreed to when it bought NBCUniversal.

You can see why Comcast would want Sky. It has 23 million subscribers across Europe. Comcast, the largest pay TV distributor in the U.S., has 29 million. A deal would immediately increase its customer base almost 80 percent.

Sky also has a online streaming box called Sky Q that sets up a foothold for selling more streaming content.

And you can see why Disney would want Sky, or a bigger international presence. It’s a clear way to grow its business, especially since one of its biggest moneymakers, ESPN, has been faltering in the ratings. In fact, one of Sky’s biggest assets is its sports rights. It owns TV rights through 2021 to the English Premier League, which draws a bigger audience than the NFL. (Nilay Patel, The Verge’s editor in chief and a massive EPL fan, points out Comcast’s NBC has U.S. rights to the Premiership, further highlighting its motivation to buy out Sky and keep it from Disney.)

But Comcast’s Sky offer could be better for investors than Murdoch’s for two key reasons: 1) it’s higher, but more importantly 2) it’s more likely to pass muster with U.K. regulators.

Murdoch has wanted to buy out the rest of Sky since 2011, just before a hacking scandal hit his media empire. Murdoch withdrew his bid after it was revealed reporters at one of his U.K. newspapers had hacked the phone of a murdered school girl. After that scandal died down, he tried again with a bid in 2016. That deal is still pending, but U.K. regulators poured cold water on it when they determined Murdoch already controlled too much news media in the U.K. and that letting him own Sky outright was “not in the public interest.”

Murdoch could increase his bid, but that wouldn’t change regulators’ minds about media plurality. Or, as 39 percent owner of Sky, Murdoch could stand to make a lot of money simply by accepting Comcast’s $31 billion takeout offer. Disney would just have to settle for owning Fox’s U.S. assets: Its movie studios and its 30 percent stake in Hulu.

But Disney’s Iger isn’t one to shy away from big deals. Disney could still make its own take-out bid for Sky directly. Again, U.S. businesses are flat. There’s more potential to grow abroad, especially as the pay TV industry isn’t as developed in places like Europe.

And there is still the outside chance that Murdoch relents and sells to Comcast instead of Disney. He’s lost merger wars before, most notably to John Malone when Murdoch was forced to give up control of DirecTV in order to preserve his own empire.

More complicated: Murdoch helped build Sky in the first place, and his son James Murdoch sits on the Sky board as chairman. James is also the CEO of 21st Century Fox, but he’s had to share power alongside his brother Lachlan as well as his father.

That’s why James has been subtly angling for more autonomy ever since, and Disney’s deal to buy Fox’s assets was seen as a possible way out. The obvious scenario would have him running Disney’s newly acquired international business after the Fox deal.

Here’s the thing: James could just as easily work for Comcast.

As Roberts said of Sky in the company statement announcing the bid: “We think Sky is an outstanding company. ... It has great people and a very strong and capable management team.”

But the best part of the contested bid for Sky is how Roberts was convinced it would make a good acquisition. As he explained on a press call, when he went on a November trip to London, a cab driver explained to him the key differences between Sky and rival Virgin Media, which is owned by Malone. Later, at a mall, he saw how Sky’s internet streaming box worked. “We were terribly impressed,” he said.

* NBCUniversal owns a minority stake in Recode parent Vox Media.

This article originally appeared on Recode.net.

We have a request

Vox's journalism is free because we believe that everyone deserves to understand the world that they live in. That kind of knowledge helps create better citizens, neighbors, friends, parents, consumers and stewards of this planet. In short, understanding benefits everyone. You can join in on this mission by making a financial gift to Vox today. Reader support helps keep our work free, for everyone. Will you join us?

One-Time Monthly Annual

$95/year

$120/year

$250/year

$350/year

Other

$

Yes, I'll give $120/year

Yes, I'll give $120/year

We accept credit card, Apple Pay, and Google Pay. You can also contribute via