After months of speculation, Comcast has finally submitted a bid of $65 million to acquire 21st Century Fox's assets, including Sky.
In its filing with the SEC, directed at Fox shareholders, Comcast said: “We believe that a vote against the Disney merger agreement proposal will send a clear message to the 21CF board that you firmly believe the Comcast proposal is a superior proposal, that you do not want the proposed Disney transactions to be completed, and that the 21CF board should instead engage in good faith with Comcast to negotiate and execute definitive agreements with respect to the Comcast proposal."
Fox has since issued a statement saying it is evaluating the next steps and has yet to decide whether to suspend the scheduled 10th July shareholder meeting to vote on the Disney deal, in the wake of Comcast’s rival bid.
Meanwhile, in a call with conference call with analysts, Comcast chairman and CEO Brian Roberts said his company’s proven track record in large-scale M&A and his experience running a “family business” make Comcast the better choice. Comcast began as a small regional cable company before Roberts, his father and Steve Burke built it into the company it is today.
Explaining why Comcast wants Fox's assets, Roberts said: “We firmly believe that the truly great media companies of the next century will be large integrated entities with multiple growth engines across a wide swath of the global entertainment industry."
Comcast concentrated on the international aspects of the transaction – it said the addition of the Fox assets (which includes Sky, derive 70 per cent of their revenue outside of the US) would boost Comcast’s international revenue from 9 per cent of total sales to 27 per cent.
But the deal will be expensive. Comcast said the $65 billion cash offer would increase leverage to more than four times cash flow, up from its current level of 2.2 times.
Roberts called the increased leverage “temporary."
“I think we will be very focused on getting leverage back to where we are,” Roberts said. “That ‘s the benefit of being in the subscription business, here’s a predictability.”