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Regulatory intelligence

Comcast bid for Fox would be biggest all-cash deal ever

Media companies are competing with each other like never before so they can remain relevant in a changing landscape. This is likely to produce some mega-deals.

The battle among media titans just got more intense: Comcast Corp. has bid US$77.5 billion for the media assets of 21st Century Fox. If the offer is successful, it would be the largest all-cash deal of time, according to the Thomson Reuters Deals Intelligence team.

Comcast’s play for Fox is larger than the previous biggest all-cash deal of all time, Bayer AG’s US$63.87 billion acquisition of Monsanto Corporation in May 2016. The bid also leapfrogs over that made for Fox by Walt Disney Corp., which bid US$52.4 billion in December 2017.

Comcast’s bid comes at a time when media companies are fighting tooth and nail to capture as many pieces of a fragmenting market as they can. With more options available on more devices, and new players like Amazon and Netflix finding quick and decisive success, media companies are realizing they have to go big or risk going home. As Jen Saba, a media columnist for Reuters Breakingviews, said during a recent Reuters Newsmaker event, “Everybody’s trying to get in everybody else’s business.”

Whomever wins Fox will own its television and movie studios, cable television networks like National Geographic and FX and its 30 percent stake in the streaming site Hulu. That’s an appealing array of options for media companies that want to establish or solidify their presence across many platforms.

“Think about what’s happened,” Samantha Greenberg, managing partner at Margate Capital, said at the same Reuters Newsmaker event. “Ten million people have cut the cord in the last five years. Last year was the first year – the first non-recession year – where television advertising declined, and you’re seeing companies like Netflix and Amazon approach the double-digit billion-dollar programming budgets that had traditionally been the purview of the NBC Universals, Disneys, the Time Warners. So, you are seeing a massive reaction to the realities of how the business has changed and how many structural challenges there are.”

On June 12, a United States federal judge ruled in favor of the US$85.4 billion merger between AT&T and Time Warner, which the Justice Department had sought to obstruct for fear of allowing a monopoly. Industry observers have said they believe this will result in even more mergers in the media industry.

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Watch the full Reuters Newsmaker “No Safe Space for Big Media.”

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