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Media conglomerates and mergers


Phantom Roxas

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https://arstechnica.com/tech-policy/2018/07/new-york-revokes-approval-of-chartertime-warner-cable-merger/

 

New York revoked its approval of Charter's merger with Time Warner Cable after Charter apparently failed to live up to an agreement to secure New York's approval in 2016. It would only affect the merger within New York, but this should be interesting nonetheless.

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https://deadline.com/2018/08/otter-media-acquired-att-crunchyroll-fullscreen-rooster-teeth-1202441941/

 

AT&T just finished acquiring all of Otter Media, which will now be folded into WarnerMedia. Given that AT&T just got Time Warner two months ago, I'm concerned about how Otter Media is ending up lower on the totem pole. From a business perspective, Otter Media is a perfect fit to be integrated into WarnerMedia, but after the change from Time Warner to WarnerMedia as a part of AT&T, it's frustrating to then see WarnerMedia in turn become what new acquisitions will be folded into.

 

https://variety.com/2018/biz/news/leslie-moonves-shari-redstone-allegations-1202890542/

 

This story is one I'm not entirely comfortable using for the purposes of this thread. Les Moonves is under pressure due to sexual assault allegations against him, and while that in and of itself is a problem, this is seen as an opportunity for Shari Redstone, who has been trying to oust Les Moonves to assert greater control over CBS, and in turn merge it with Viacom.

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https://www.bloomberg.com/news/articles/2018-08-08/fox-s-entertainment-assets-shine-helping-validate-disney-deal

Fox has extended the deadline to reach a deal for Sky. While they haven't raised their bid, they now have until September 22 to do so. They only need to persuade 50% of Sky shareholders to approve of the takeover, but since Fox already owns a 39% stake anyway, they really only need to convince 11%. If an agreement isn't reached, the UK takeover panel can initiate a formal auction for Sky.

 

Bob Iger reiterated his interest in acquiring Sky, so it's unlikely that Disney is going to be walking away from this situation. There's still speculation that Disney/Fox and Comcast could split up Sky, but given how there was similar speculation for splitting up Fox, and that never came to pass, we'll probably see this be either all or nothing.

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https://www.reuters.com/article/us-sprint-corp-m-a-t-mobile-us/t-mobile-runs-behind-the-scenes-pr-push-to-support-sprint-deal-idUSKCN1L512A

 

T-Mobile is running a PR ploy, persuading smaller carriers who use their network to publicly support the Sprint/T-Mobile merger, as well as offering talking points to use in interviews. This is… pretty skeevy, but ultimately I don't see anything that could be held against them for regulatory approval.

 

https://www.cnbc.com/2018/08/10/hulu-loses-roughly-1point5b-a-year-and-disney-is-set-to-double-its-stake.html

 

Hulu is estimated at losing $1.5B a year. While Hulu does not report numbers themselves, Comcast, Fox, and Disney each attributed losses to Hulu. This is especially important to keep track of because Disney is set to double their stake once they acquire Fox, and the best reason to keep Hulu around is mostly because there's already an established subscriber base, rather than trying to build one from the ground up.

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http://www2.philly.com/philly/business/comcast/sky-shareholders-spurn-comcast-offer-disney-fox-20180823.html

Only 0.21% of Sky stakeholders has accepted Comcast takeover offer. Comcast has set a new deadline for September 12, ten days before Fox's own deadline to raise their own bid for Sky. The low acceptance is likely due to anticipation for Fox's increased bid.

 

Doesn't seem like there's been any updates on federal approval for the Disney/Fox deal, but at the very least, next month should mark the end of the bidding war with Comcast.

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https://deadline.com/2018/08/doj-comcast-scrutiny-continue-post-consent-decree-nbcu-1202455013/

 

The DOJ has maintained that they'll be keeping an eye on Comcast's handling of programming and distribution, even though the consent decree over the NBCUniversal acquisition has expired.

 

https://deadline.com/2018/09/cbs-settlement-talks-national-amusements-corporate-fight-lawsuits-les-moonves-1202457668/

 

Looks like CBS's lawsuit against National Amusements will reach a settlement, mostly because CBS is not in a good position to mount a legal battle when there's already sexual harassment allegations against Les Moonves, who may be offered a $100M severance package to oust him from the company.

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Alright, this is going to be a bit difficult for me to mention, mostly because only part of it relates to this thread.

 

https://www.reuters.com/article/us-cbs-moonves-settlement/cbs-ceo-moonves-resigns-company-settles-shari-redstone-nai-lawsuit-idUSKCN1LP0W8

 

This article best shows how two pieces of news have been announced.

 

1. Les Moonves is "resigning" from CBS following further sexual assault allegations.

2. CBS has reached a settlement in their suit against Shari Redstone.

 

I know this is not meant to a thread to discuss #MeToo, so I'll be brief and say that while Les Moonves does seem to have been forced out over the allegations, it seems that those concerns are really secondary to what CBS is more focused on. The hostility between Redstone and Moonves is something I've focused on throughout this thread, since he was the primary obstacle between the suspected plan for Shari Redstone to reunite CBS and Viacom, with the possibility of selling the merged company. With Moonves gone, I believe that merger scenario is more likely now.

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https://www.bloomberg.com/news/articles/2018-09-19/comcast-fox-battle-for-sky-could-be-resolved-in-one-day-auction

 

The race Sky could end this Saturday, since the U.K. Takeover Panel has determined that an auction must be held to wrap up Fox and Comcast's bidding war. The exact nature of the auction has yet to be determined, but a one-day auction is being considered. This is consistent with Sept. 22 being previously set as the deadline. After Fox and Comcast make their offers, Sky shareholders will have until October 6 to accept whichever offer they may prefer.

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Speculation is that Fox may sell it for the same price that Comcast has bid for the majority of Sky. The other side of this is that Comcast may actually be willing to sell their stake in Hulu. Since Disney is going to acquire majority control of Hulu after the Fox merger, there's little incentive for Comcast to stay involve. So I could see a scenario where, while there could be two separate transactions, with Comcast selling their Hulu stake while Disney/Fox sells their Sky stake, it would essentially be trading Sky for Hulu. Plus, it may be in Disney's interests to sell off Sky to help cover the cost of acquiring Fox.

 

That said, despite winning the bid, Comcast's stock has actually gone down, while Disney's has gone up. Given that Disney's hire bid for Fox was seen as overpaying, while Comcast paid well above their own intended threshold to ensure that Disney could not match their bid, it's likely that Comcast may have been the one who overpaid for Sky.

 

Essentially, while it's possible that Fox's stake in Sky could be sold, Comcast acquiring Sky is not necessarily guaranteed, since they have to persuade at least 50% among the 61% that is up for grabs.

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So after doing a little digging, Disney/Fox may ask for more than just Comcast's 30% in Hulu for Fox's 39% in Sky, given the value of the respective shares ($8.7 billion as of April for Hulu and Comcast's evaluation of $38.8 billion for Sky [total worth of both companies]). So, a direct Sky for Hulu trade doesn't work financially. I imagine Fox will ask for Hulu and the rest in cash.

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That makes sense. Hulu has less value than Sky (Especially when Hulu has been the source of losses for all its owners), so a simple 1:1 trade would benefit Comcast far too much, and Disney and Fox would get the short end of the deal. Cash would probably be best to make to make up the difference, since Disney does need to cover all their expenses in this bidding war.

 

However, Comcast stands to owe $100B in debt, regardless of whether they obtain Fox's Sky stake.

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https://www.businesswire.com/news/home/20180926005631/en/Walt-Disney-Company-Consents-21st-Century-Fox%E2%80%99s

 

It seems that Comcast will get Sky after all, with Disney/Fox agreeing to sell their stake for $15B. Hulu isn't a factor here - only getting mentioned as far Disney simply seeking increase investment in Hulu's offerings - but this does accomplish what I expected about Disney trying to reduce their debt in acquiring Fox. Whether Disney gets 90% of Hulu remains to be seen, but I believe that may be too complicated at the moment. Selling the Sky stake does enough to reduce their debt, but if they tried to purchase Comcast's Hulu stake, that may only add more to their debt.

 

Either way, Disney did manage to funk over Comcast. While Comcast may have pushed Disney to overpay for Fox, Comcast in turn had to overpay for Sky, and pay Disney to get the Sky stake, which covers the difference between Disney and Comcast's final bids for Fox by twice the amount. Basically, Disney managed to minimize their expenses as best they could, while Comcast has only pushed themselves deeper into debt.

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https://www.zerohedge.com/news/2018-10-17/supreme-court-takes-case-could-end-internet-censorship-expand-first-amendment

 

 

Manhattan Community Access Corp. v. Halleck, No. 17-702, the case that it has agreed to take, will decide if the private operator of a public access network is considered a state actor, CNBC reported.
 
The case could affect how companies like Facebook, Twitter, Instagram, Google and YouTube are governed. If the Court were to issue a far-reaching ruling it could subject such companies to First Amendment lawsuits and force them to allow a much broader scope of free speech from its users.
 
The Court decided to take the case on Friday and it is the first case that was taken after Justice Brett Kavanaugh joined the Court.
 
DeeDee Halleck and Jesus Melendez claimed that they were fired from Manhattan Neighborhood Network for speaking critically of the network. And, though the case does not involve the Internet giants, it could create a ruling that expands the First Amendment beyond the government.
 
“We stand at a moment when the very issue at the heart of this case — the interplay between private entities, nontraditional media, and the First Amendment — has been playing out in the courts, in other branches of government, and in the media itself,” the attorneys from MNN wrote in their letter to the Court asking it to take the case.
 
The Court could either rule in MNN’s favor, rule against it in a narrow scope that does not affect other companies, or it could rule in a broad manner that would prevent the abilities of private networks and Internet companies to limit or censor speech on their platforms.
 
Seemed somewhat relevant if this is the media thread

If they go for the aggressive ruling, NN is also enshrined technically. Cuz if firms can't snuff speech, doesn't hold why ISPs can. Especially when money has been ruled to be a form of speech


https://www.cnbc.com/2018/10/16/supreme-court-case-could-decide-fb-twitter-power-to-regulate-speech.html

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https://www.reuters.com/article/us-sky-plc-m-a-comcast/comcasts-40-billion-sky-takeover-becomes-unconditional-idUSKCN1MJ1XO

 

Wanted to wait a bit longer before updating on Comcast purchasing Sky, but they've acquired Fox's previous stake, and now control at least 75% of Sky. With Comcast as a majority owner, Sky is expected to delist from the stock exchange by November 7.

 

https://nypost.com/2018/09/26/new-cbs-board-may-be-more-open-to-viacom-merger/

 

No real surprise on this one, but with Les Moonves gone from CBS, there's further speculation that a CBS/Viacom reunion will be more likely, especially with new board members that have little to not incentive of upholding Moonves' vision for the company, and were likely elected by National Amusements.

 

https://www.tmonews.com/2018/10/t-mobile-fcc-5g-network-model-sprint-merger/

 

Sprint and T-Mobile are still trying to persuade the FCC to approve the merger. Generally they're still trying to cite the development of 5G as incentive to approve their merger.

 

https://www.forbes.com/sites/jillgoldsmith/2018/10/15/disney-offers-europe-concessions-for-fox-merger-nod/#158cce953d03

 

Disney has reached some unspecified concessions with the European Commission regarding antitrust concerns, allowing an extension until November 11 for further review of the deal.

 

https://www.hollywoodreporter.com/news/will-china-try-block-disney-fox-deal-1152832

 

However, the Disney/Fox merger may race opposition in China, as Chinese antitrust law may be excessively strict on the merger due to its heavy U.S. ties.

 

I shall note that, although that article does refer to the possibility that this is retaliation against Trump's tariffs, I do not want to discuss the tariffs, or whether this is an appropriate response to those tariffs. Focus on the mergers themselves, not about tariffs.

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https://www.fiercevideo.com/video/how-hbo-blackout-dish-might-impact-doj-s-appeal-at-t-s-time-warner-merger

 

Finally some progress on the AT&T/WarnerMedia merger appeal. HBO recently suffered a blackout on Dish TV, with both AT&T and Dish accusing each other of being responsible. On the one hand, this could prove the argument that AT&T would withhold their networks from distributors, a concern that was raised during the initial trial. However, Dish apparently does have a history of blacking out channels to negotiate in bad faith. Either one of them could be responsible, but with oral arguments in the appeal set to begin on Dec. 6, this is not a good look for AT&T going into that.

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