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Here’s why Comcast says it should own Fox’s business — and why Fox says it still prefers Disney

What to expect from both sides as they spin the merits of their respective deals.

Disney Avengers Age of Ultron

It’s the Minions versus the Avengers with Rupert Murdoch in the middle.

Comcast plans to outbid Disney for Fox’s movie and TV studios, its cable networks and its stake in Hulu, announcing today it’s in “advanced stages of preparing an offer.”

Murdoch, who heads Fox, already turned down a proposal from Comcast late last year in favor of Disney, despite Comcast’s 16 percent higher bid.

Comcast intends to make another run, so today’s statement serves to officially notify Fox shareholders before they vote on Disney’s offer this summer.

Now that it’s out in the open, a bidding war is sure to ensue, and Comcast and Disney will offer their respective spins. Here’s what to expect:

From Comcast:

  • Simple: We’re paying more. Comcast has already secured financing for at least $60 billion in cash, according to sources. That compares to Disney’s offer of $52.4 billion, which comes as Disney stock.
  • Yes, Fox shareholders would have to pay taxes on that cash , but even if you took Disney’s shares (instead of Comcast’s cash), you would still have to eventually pay taxes when you sell your Disney shares.
  • If you have concerns over the timeline for regulatory review, don’t. Regulators looking at a Comcast-Fox deal wouldn’t be starting from scratch. Disney may appear to have a jump since it’s already started the process with U.S. agencies, but they’ve also asked Comcast for material as part of that review, insiders say. If Fox shareholders go for Comcast’s offer, the regulatory bodies already have a lot of the material in that scenario too.
  • Speaking of regulatory review, Disney + Fox has plenty of potential problems. For instance, Disney would control more than 40 percent of the box office if it’s allowed to buy Fox’s studios. It would also face scrutiny since it owns ESPN and would get Fox’s regional sports networks as part of the deal.

From Disney / Fox:

  • This deal is better because of certainty that it will close. A bigger offer from Comcast isn’t useful if Comcast can’t get the deal done.
  • Disney’s stock, or Disney’s stock plus some cash, is better than Comcast’s cash, because Disney’s stock can be worth more one day.
  • A Comcast/Fox tie-up poses more regulatory problems than a Fox/Disney combination. Comcast, for instance, is already in the regional sports network business. (But yes, ESPN and also Disney own some RSNs.)
  • Comcast is a bad actor that has continually violated the spirit and terms of the consent decree it agreed to follow when Comcast bought NBCUniversal in 2011. Regulators are already mad at it. (Update: Comcast notes it has never been found in violation of the DOJ consent decree.)
  • Even if the AT&T/Time Warner deal is approved, that doesn’t mean it’s a good proxy for a potential Comcast/Fox deal. Some experts contend an AT&T win (which is expected) clears a regulatory path for Comcast to buy Fox. AT&T and Comcast are both distributors buying content companies — but Comcast is also a content company buying another content company.
Image of the media landscape, updated May 23 Rani Molla

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