Media conglomerates and mergers

[Phantom Roxas]

https://nypost.com/2018/06/07/time-warner-merger-could-still-fall-apart-if-att-wins-suit/
 
Something I don't believe I've mentioned yet is that, even if the DOJ loses their lawsuit against AT&T and Time Warner, they could still ask for a motion to stay. The long-term goal there would be to appeal the decision, but generally any kind of stay would delay the merger long enough to pass AT&T and Time Warner's deadline to close the merger. Basically, the DOJ would be wasting time just to force the merger to fall through. As far as the trial is concerned, the two major concerns are how Richard Leon will rule, and the DOJ in particular will respond to that ruling.
 
https://www.reuters.com/article/us-fox-m-a-walt-disney/disney-fox-carved-out-assets-surgically-us-antitrust-chief-idUSKCN1J32GP
 
Makan Delrahim seems to give some praise towards the Disney-Fox deal for having "carved out assets surgically". Given that his main complaint with AT&T and Time Warner is that he believes structural remedies are more reliable than claiming behavioral remedies (Some of his statements read like passive-aggressive jabs at AT&T and Time Warner for that reason), for Disney and Fox to have carefully selected their assets seems to preemptively satisfy Delrahim, especially since AT&T and Time Warner have consistently refused such structural remedies.
 
That's probably the key for Disney and Fox here. While this horizontal merger does pose more of a risk than AT&T and Time Warner's vertical merger, the steps they've already taken is essentially making the deal somewhat more even. In part because 21st Century Fox is splitting in two, so it's not completely removing Fox as a company. However, it's still a horizontal merger nevertheless.
 
https://www.hollywoodreporter.com/news/rupert-murdoch-may-be-willing-go-comcast-bid-fox-assets-report-1118064
 
Of course, that's assuming this deal goes through. It seems that Rupert Murdoch is now more seriously considering Comcast's own offer, or at least his confidence in the Disney deal is not so solid anymore, due to Comcast preparing their superior offer. Since this may be dissuading shareholders from voting in favor of the the Disney deal, there's a bit of an odd situation here because Disney needs to prepare for a higher bid to beat one that hasn't been made yet. Comcast's rumored about is to be $60 billion.
 
Comcast's revenue from 2017 was $84.53 billion. https://finance.yahoo.com/quote/CMCSA/key-statistics/
 
By comparison, Disney's was $55.7 billion. https://finance.yahoo.com/quote/DIS/key-statistics?p=DIS
 
I don't think Disney can afford to top Comcast's bid. While I'm sure they could try, especially if they gather other financial sources, this shows why Disney made their bid lower than Comcast's; it's about as much as they could manage. I don't claim to be an expert in business, finance, or statistics, but the bottom line is that Comcast's revenue gave them a leg up to bid for Fox. Disney trying to outbid $60 billion could risk putting them in debt.
 
This is high risk for both companies, then. I don't doubt that Disney will try to outbid Comcast, but if they do, they really need to win this.

[Phantom Roxas]

https://www.reuters.com/article/us-sky-plc-m-a-comcast-eu/comcast-to-win-unconditional-eu-okay-for-sky-bid-sources-idUSKCN1J42H0

 

The European Union is set to give Comcast unconditional approval for Sky. Since the condition for Fox is that they need to divest Sky News to a third party like Disney, Comcast would probably not have any conditions because they may become one of the potential buyers of Sky News. I guess the third bidding war would be Disney vs. Comcast for Sky News.

 

https://www.laughingplace.com/w/news/2018/06/08/report-comcast-expects-to-make-offer-for-fox-on-wednesday/

 

Comcast's bid for Fox is expected by Wednesday, June 13, the day after Judge Leon rules on the AT&T/Time Warner merger. Disney may agree to divest Fox's regional sports networks to acquire Fox, while Comcast may agree to the same regulatory conditions as Disney, putting more emphasis on the bids themselves so Fox would be choosing more between the money, rather than structural changes. However, David Faber wonders in the video report in that article what content Disney and Fox would actually get from this deal, since it would mostly come down to Fox and National Geographic, and he also speculates if Disney would end up divesting Hulu.

 

Since Disney, Comcast, and Fox each have a 30% stake in Hulu (Time Warner's Turner Broadcasting has the remaining 10%), whoever buys Fox would theoretically have majority control with a combined 60% stake. Since Disney has been wanting to build their own streaming service, I could see two main options for Hulu. I've seen speculation that Hulu would be divested to deny, which I could understand since that would be to deny Disney majority control of Hulu, although I doubt Disney would be too upset about if they're planning to make their own streaming service from the ground up. It's possible that Hulu could be a useful template for their streaming service, but unless Disney tries to buy the remaining 40% stake, Disney might prefer to make streaming service wholly owned by themselves.

[Phantom Roxas]

Judge Richard Leon grants AT&T unconditional approval to acquire Time Warner, rejecting the government's case.

 

https://www.cnbc.com/2018/06/12/att-time-warner-ruling.html

[Ryusei the Morning Star]

DoJ dropped the ball on this. They can appeal to higher courts can't they?

[Phantom Roxas]

DoJ dropped the ball on this. They can appeal to higher courts can't they?

 

I believe so. Even before this ruling, it seemed that the consensus was the DoJ could still appeal, though they're apparently still thinking that over.

 

https://deadline.com/2018/06/att-time-warner-merger-approved-judge-ruling-justice-department-1202408367/

 

They would have to act quickly, though. Since the deadline for AT&T and Time Warner's merger is in nine days, any attempt at an appeal would be more likely to simply force this deal to fail to meet its deadline, rather than make a successful appeal. Though I believe the DoJ doesn't care whether or not they win such an appeal as long as they can make the deal expire.

[Ryusei the Morning Star]

I believe so. Even before this ruling, it seemed that the consensus was the DoJ could still appeal, though they're apparently still thinking that over.

 

https://deadline.com/2018/06/att-time-warner-merger-approved-judge-ruling-justice-department-1202408367/

 

They would have to act quickly, though. Since the deadline for AT&T and Time Warner's merger is in nine days, any attempt at an appeal would be more likely to simply force this deal to fail to meet its deadline, rather than make a successful appeal. Though I believe the DoJ doesn't care whether or not they win such an appeal as long as they can make the deal expire.

Might as well, they just got tax cut to 20%, not sure why they need to further monopolize. Even vertical mergers are problematic in my opinion. 

 

That being said, funking Jeff Sessions will waste more time trying to bust weed dealers and piss off Trump with the Russia plan instead of thwarting the impending technocratic take over of America 

[Phantom Roxas]

That second part is off-topic, so take your bait elsewhere.

 

But yes, the vertical mergers are just as much of a problem. Which is why it's baffling that this is expected as a precedent for more horizontal mergers like Sprint/T-Mobile or whoever gets Fox and/or Sky.

 

In light of this result, Comcast is expected to make their bid for Fox tomorrow. So we'll see what happens there. Considering all the trepidation surrounding Disney's own deal with Fox, I hope Comcast is rebuffed. I don't care if people are trying to characterize Brian Roberts as an aggressive businessman as if that's a good thing, 

[Phantom Roxas]

Okay, here we go. Judge Leon explicitly warned the DoJ against even attempting an appeal.
 
https://variety.com/2018/biz/news/att-time-warner-merger-approved-1202840369/
 

He said it would be a “manifestly injustice” outcome of the case if the government sought a stay to further delay the merger, costing both companies, which have a $500 million breakup fee and faced a self-imposed June 21 deadline to complete the transaction.

“To use a stay to accomplish indirectly what could not be done directly — especially when it would cause certain irreparable harm to the defendants — simply would be unjust,” Leon said. “I hope and trust that the government will have the good judgment, wisdom and courage to avoid such a manifest injustice.”

Leon also seemed to be urging the government to think twice about even pursuing an appeal. He noted the “staggering cost” of the investigation, litigation and trial, saying that it has “easily” run into tens of millions of dollars for the companies and the government.

 

I'm greatly concerned that AT&T will take advantage of the net neutrality repeal, especially now that AT&T stands to be even more of a monopoly, but unfortunately, I can sympathize with Leon's position here. Trying to appeal here would be far too underhanded and waste a whole lot of money. The appeal itself could be rejected, and I imagine Leon would only accept an appeal if they have really good grounds for one. His main reason for approving this merger is that the DoJ did more than drop the ball. Their case was considered flimsy. Even if their own predictions for what could happen may turn out to be true, they frankly did not provide persuasive enough evidence.

 

Basically, no matter your concerns for this merger, the DoJ does not have a legitimate reason to keep pursuing this. They can make an appeal. In fact, it's why he chose this date to give his deadline, so that there would be enough for the losing side to make their appeal. It just won't succeed.

[Phantom Roxas]

https://www.theverge.com/2018/6/13/17457244/comcast-21st-century-fox-film-tv-studios-acquisition-deal-announced

 

Comcast has formally announced their $65 billion bid for 21st Century Fox. It's higher than expected, and Brian Roberts seems extremely confident in the deal, mostly due to Comcast's smaller international presence compared to Disney. Disney apparently has five days to raise their bid, so now the ball is in Disney's court. It seems like Roberts wants this bidding war finished before July 10.

 

And the European Union will rule on Comcast's bid for Sky in two days, so then both of Comcast's bids will be in play here.

[Phantom Roxas]

https://www.reuters.com/article/us-time-warner-m-a-at-t/att-to-close-time-warner-deal-but-government-does-not-rule-out-appeal-idUSKBN1JA36U

 

AT&T and Time Warner closed their merger. The DoJ has decided against asking for a stay, agreeing that the deal should be closed immediately, although they still have about 60 days to appeal the ruling if they wish to.

 

https://nypost.com/2018/06/13/time-warner-name-expected-to-be-dropped-after-att-merger/

 

This has been apparent for a while, but the "Time Warner" name will dropped through this merger. According to AT&T's announcement of closing the merger, Time Warner's properties are being considered "AT&T's media business", with a new name to announced in due time. However, in taking on net debt from Time Warner, AT&T now has $180.4B in debt. The bulk of that comes from AT&T's own $163B.

 

Additionally, Jeff Bewkes will be receiving his payout as he leaves his position as CEO of Time Warner, though will continue on in an advising role to AT&T for full integration of the merger.

[Phantom Roxas]

Time Warner has been rebranded as WarnerMedia. It will still be the same umbrella company of HBO, Turner Broadcasting, and Warner Bros. we've always known.

 

Time Warner will be delisting itself from the New York Stock Exchange now that it is a subsidiary of AT&T. This shouldn't be too surprising, so this is more of an official statement than anything else.

 

Unless the DoJ does plan to appeal this ruling, I believe that should be the end of this, so I have no plans to continue posting about the AT&T/Time Warner merger in this thread. Right now, the major subjects I'll still focus on will be the Disney and Comcast bidding wars for Fox and Sky, and possibly whatever mergers seem interesting.

 

Speaking of which, Comcast has formally received their unconditional approval to bid for Sky.

 

Fox shareholders will be meeting next Wednesday to discuss Comcast's bid.

[Phantom Roxas]

https://www.fiercewireless.com/wireless/sprint-t-mobile-merger-proposal-gets-official-at-fcc
 
Sprint and T-Mobile have officially filed their merger proposal with the FCC to begin the regulatory process. It's possible for them to get blocked, though this is another example of how AT&T's victory has encouraged other mergers.
 
https://arstechnica.com/information-technology/2018/06/after-time-warner-buy-att-plans-more-online-video-and-bigger-ad-platform/
 
Well, I guess there's still more to say about AT&T after all. AT&T is now going to be seeking more acquisitions for smaller advertising companies, and with the net neutrality repeal, "AT&T will have plenty of leeway in how it favors Time Warner programming on its TV and broadband services because of federal government decisions not to enforce broadband privacy and net neutrality rules."

 

https://www.bna.com/atttime-warner-appeal-n73014476598/

 

Attorneys suggest that the DOJ may have a difficult time appealing Judge Leon's ruling, although he has had a high overturn rate, so there's a lot of precedent for his rulings being appealed. I would say it's a coin toss, but it'll come down to whether or not DOJ acts before their time is up.

 

https://www.reuters.com/article/us-gamestop-m-a-exclusive/exclusive-retailer-gamestop-in-talks-with-buyout-firms-after-receiving-takeover-interest-sources-idUSKBN1JE2JI

 

Okay, now this is a random merger, but here goes. GameStop is purportedly seeking a buyer, and Sycamore Partners (Who owns Hot Topic) has begun talks. While this is not the usual kind of merger I've wanted to talk about in this thread, I do think it's relevant, especially since retailers have been in decline due to alternatives like Amazon. This is probably going to be another "We need to merge to survive against FAANG", so chances are GameStop may get a buyer here. I don't think there would be too much trouble with Sycamore, though I've only just now learned about them anyway.

 

https://deadline.com/2018/06/21st-century-fox-disney-forced-to-increase-sky-news-budget-to-130m-per-year-to-push-through-takeover-1202413265/

 

Returning to the Disney/Comcast/Fox/Sky bidding war, the terms of the possible sale of Sky News to Disney is now that Disney would be restricted from selling Sky News for 15 years without the consent of the Secretary of State, and must be committed to operating its service for those 15 years, as well as increasing their budget. Matt Hancock will be consulting with all parties over the next 15 days, and requests views by July 4. That would be just under a week before Fox votes on whether or not to move forward with the Disney deal. This is also a reminder that Fox will hold a meeting tomorrow about Comcast's bid, then the question will be whether or not Disney raises their bid for Fox.

 

https://deadline.com/2018/06/comcast-would-shed-foxs-30-stake-in-hulu-to-win-regulatory-approval-1202411002/

 

As far as concessions are concerned, Comcast is willing to shed Hulu's 30% stake in Fox to reach this deal, and I'm happy with that, as well as the terms regarding Sky News. Along with Disney and Comcast being willing to divest Fox's regional sports networks, it sounds like this deal could be growing smaller and smaller, though still significant. There would still be plenty for them to compete over, but so far I'm more interested it what could be divested. AT&T and Time Warner had both refused to divest any assets, which I suppose they could get away with because it was a vertical merger, but Disney and Comcast both need to be willing to divest parts of Fox because this is a horizontal merger.

 

Granted, I imagine that both are only willing to divest seem of these particular assets because they only want Fox for the film studio and Sky anyway, so the "crown jewels" of this deal would still be intact.

[Phantom Roxas]

https://deadline.com/2018/06/disney-fox-merger-increased-bid-in-wake-of-comcast-offer-1202414080/

 

Disney has raised their bid for Fox to $71.3B. Considering that Disney's previous bid was $52.4B, this is a massive raised, and more importantly, it means they've outbid Comcast, or at least for now. No word yet on how many days Comcast has to raise their own bid.

[Nathanael D. Striker]

https://deadline.com/2018/06/disney-fox-merger-increased-bid-in-wake-of-comcast-offer-1202414080/

 

Disney has raised their bid for Fox to $71.3B. Considering that Disney's previous bid was $52.4B, this is a massive raised, and more importantly, it means they've outbid Comcast, or at least for now. No word yet on how many days Comcast has to raise their own bid.

I doubt Comcast would want to raise, considering the debt they'd take on if they continue pursuing an all cash offer.

[Phantom Roxas]

Precisely, though it says a lot that debt would be the biggest scare to Comcast here. While Disney would also be taking on a lot of debt, Disney seems more capable of paying back all that debt. Comcast had to borrow the majority of the money to make this bid, so Comcast has already been in debt here.

 

I may have mentioned this before, but other reports I've seen suggest that ego will overtake business sense here. That Comcast made this bid at all suggests that, and I don't think Comcast would have done with is they didn't expect Disney to raise their bid. While the difference between Disney's previous and new bids is $18.9B, Comcast improved on Disney's bid by $13B, while Disney in turned raised the remaining $6B after that. Comparatively, Disney has made the "smaller" raise.

 

I've also seen it suggested that Comcast, whether or not they get Fox, could just be trying to drive up the price of the deal, so even if Comcast may not need to bid higher, so long as they've forced Disney to end up paying more. While that could force Disney into debt, that… seems like a really dumb strategy on Comcast's part, if that were true. I can't see them driving up the price, and then giving up. They had to have prepared for a bidding war. Comcast shouldn't raise their bid, but I think they will.

[Nathanael D. Striker]

https://www.wsj.com/articles/comcast-isnt-done-yet-1529524156

 

Looks like the show ain't over, not by a long shot. Sad that Comcast is not being smart financially. Besides, what would Comcast do with some of Fox's assets anyway? I mean, Disney is better abled to use assets like Fox Marvel for example.

[Phantom Roxas]

https://www.cnbc.com/2018/06/20/disney-will-beat-comcast-for-fox-at-45-per-share-says-porter-bibb.html

 

The new estimate is that the bidding war will escalate to buying Fox at roughly $40-$45 per share, which could raise the price to well over $80B. There may be one more round of bidding, with Comcast raising their bid again, and Disney bidding one last time for the winning bid. Fox had postponed their July 10 meeting, so there's no exact deadline for the bidding war to end.

 

I can't really understand what Comcast is trying to get out of this deal, which is why this feels so much like mimetic desire; bidding so intensely just because Disney is. I understand Comcast needs to avoid becoming the last of the old media left on their own, so competing with Disney for Fox is probably something Comcast's executives think is their best shot to bulk up, but the higher this bid goes, the more into debt Comcast will be if they win. I'm pretty sure they're already into debt thanks to the loans they took for Fox and Sky.

 

https://www.recode.net/2018/6/20/17481532/att-otter-media-chernin-group-fullscreen-crunchyroll

 

Meanwhile, AT&T is set to acquire the rest of Otter Media, which they already have a 50% stake in due to a joint venture with Chernin Group. They've already been working on this deal for the past couple of years, but it's been tied up due to the Time Warner deal.

[Dad]

Disney has trillions to work with.  Eighty billion is a drop in the bucket to them.  Comcast will go under if they keep this sheet up.  And honestly, I would be pleased.

[Phantom Roxas]

Disney has trillions to work with.  Eighty billion is a drop in the bucket to them.  Comcast will go under if they keep this sheet up.  And honestly, I would be pleased.

 

Precisely. Disney has the money to spare, while Comcast has ducked themselves into a corner. Comcast quite frankly should have understood that the only way to win was not to play. They're damned if they do, damned if they don't.

 

Though the downside is that, aside from the fears that this will reduce competition by one with Fox get bought up, if Comcast goes under, that's two down. This already risks Disney becoming far too powerful of a player. While I would love nothing more than for Comcast to go under, they need to win more badly than Disney does.

 

I'm of two minds here. I want Disney to beat Comcast, but I understand how that would be a disastrous result. I couldn't care less about what happens to the Comcast that owns all its subsidiaries, but among those subsidiaries is NBCUniversal, which needs to survive this bidding war instead of getting dragged down with Comcast.

 

Comcast could have let sleeping dogs lie by letting Disney but Fox. It's not that Disney necessarily needs to beat Comcast to win this. Instead, Brian Roberts is going to kill Comcast himself because he picked a fight he cannot win.

[Nathanael D. Striker]

You know, this Disney vs Comcast bidding war is funny and ironic considering Comcast tried gobbling up Disney back in 04, from what I read. Could that be part if why Comcast will try to not let Disney win?

[Phantom Roxas]

You know, this Disney vs Comcast bidding war is funny and ironic considering Comcast tried gobbling up Disney back in 04, from what I read. Could that be part if why Comcast will try to not let Disney win?

 

Yes, I'm sure that's part of it. I don't think Brian Roberts has ever gotten over that, so this seems like a roundabout way of getting revenge.

[Phantom Roxas]

https://nypost.com/2018/06/21/comcast-disney-ding-balance-sheet-in-bidding-war-for-21st-century-fox/
 
It's important to keep in mind that, while Comcast could be in serious trouble for debt if they win Fox, Disney would also face similar debt. While I believe it would be nothing to sneeze at for Disney, there is still some concern that they would have to work off their debt.
 
https://www.reuters.com/article/us-fox-m-a-disney/disney-willing-to-divest-more-fox-assets-for-deal-clearance-idUSKBN1JH3BV?il=0
 
Disney has previously expressed that they would be willing to divest Fox's assets that earned $500 million before interest, tax, depreciation and amortization (EBITDA). In order to gain antitrust approval, they're doubling that to include divesting assets that generated $1 billion in EBITDA. Although, for all the talk about divesting assets, I believe a new agreement needs to be written specifying which assets will be divested, and which would still be included.

[Phantom Roxas]

https://www.sec.gov/Archives/edgar/data/1001039/000095015718000744/form8k.htm

 

There's a lot of legal jargon, but if anyone is curious about the exact structure for the proposed Disney-Fox merger, what will happen is that a holding company will be created, called "New Disney", and both The Walt Disney Company and 21st Century Fox would become subsidiaries of that. By all accounts, "New Disney" would just take up the current Disney operations as far as the New York Stock Exchange is considered, but this is more of a heads-up so that people aren't confused when a "New Disney" is announced. This is most likely just a working name, though, matching with how the Fox assets Disney is not acquiring will be tentatively renamed "New Fox".

[Nathanael D. Striker]

https://variety.com/2018/biz/news/disney-21st-century-fox-justice-department-approval-1202859241/

 

And this should seal the deal between Disney and Fox, I believe. The DoJ isn't going to intervene as long as Disney divests from Fox's Regional Sports Networks.

[Phantom Roxas]

https://variety.com/2018/biz/news/disney-21st-century-fox-justice-department-approval-1202859241/

 

And this should seal the deal between Disney and Fox, I believe. The DoJ isn't going to intervene as long as Disney divests from Fox's Regional Sports Networks.

 

Sounds like they still need a ruling from a federal judge, and for Fox to formally vote. While Fox does seem to prefer Disney, I'm seeing really mixed feelings regarding Comcast. The Murdoch's really don't want them, but shareholders still need to vote if Comcast makes a better bid. Comcast is still considered a regulatory risk, and while they're just copying whatever terms Disney is agreeing to, those terms aren't really "one size fits all." It may be good for putting Fox with Disney, but not necessarily putting Fox with Comcast.