While the race to buy most of the assets of Twenty-First Century Fox, including Sky, seems like a winner-take-all proposition, one prominent analyst believes a split decision could be a far better solution.
Disney could be better off buying the majority of the Fox assets being sold — and Comcast would be best served if it bought just Sky, according to Moody’s Senior VP Neil Begley.
The split scenario, Begley wrote in a report last week, “would be the most desired outcome for bondholders of all companies and likely avoid one or the other becoming one of the world’s most indebted non-financial corporations.”
Begley’s analysis is of significance given the permutations at play — Disney versus Comcast as buyers and Fox versus Sky as sellers. Whoever ends up with whom will shape global media for decades.
It’s also timely given the countdown to July 27 — the date Fox set for a vote on its amended merger agreement with Disney. Comcast, which bid $65 billion for Fox, has until then to top Disney’s $71 billion offer.
As for Sky, Comcast’s $31 billion bid remains superior to the $25 billion valuation implicit in Fox’s bid in late 2016.
Begley believes Disney-Fox and Comcast-Sky combos would be better not just financially but also strategically.
Fox would thrive in Disney because the Mouse House’s “ability to monetize intellectual property across all of its lines of business is second to none,” he writes. Equally impressive would be the unification of Comcast and Sky as global pay-TV providers.
Yet moguls have egos, and the relationship between Comcast and Disney soured when the former failed in a hostile takeover of the latter in 2014.
“Rational minds will need to triumph over emotion,” Begley warns, “so that both companies’ equity holders and bondholders come out winners.”
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