As Expected, Comcast Bids for Fox

The terms of the bid largely mimic the Disney bid, as management noted in the conference call. Comcast is offering a similar $2.5 billion reverse termination fee payable to Fox if the deal fails to pass regulatory muster and will pay the $1.525 billion break-up fee due to Disney if Fox pulls out of the deal. Comcast is also willing to make the same concession as Disney in order to gain regulatory approval--the spin-out or sale of the Fox regional sports networks. We believe that Comcast may actually be more likely than Disney to be required by regulators to sell off the RSNs as Comcast already own seven RSNs. While the all-cash offer is above the Disney all-stock offer, we note that the Murdoch family appears to prefer the Disney shares and the preferable tax implications of an all-stock deal. As a result, we expect that Disney will not need to significantly outbid Comcast if and when Disney sweetens its all-stock offer with cash.

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