As Comcast ponders a bidding war against Disney for 21st Century Fox’s entertainment assets, one analyst had a rather interesting suggestion to Fierce’s query as to what assets Comcast might unload to pay down the massive debt that would come from winning a deal.
“Imagine how fantastic it would be if they spun out the cable business with 5x leverage,” New Street Research’s Jonathan Chaplin responded in an email to Fierce. “You would see a re-rating across the collection of assets like no other. That would get us to our mid-$50s price target pretty quickly.”
It’s not hard to imagine that Comcast executives haven’t at least thought about divesting the most core of their assets, as they look to find ways to finance a bidding war that some analysts say could go as high as $90 billion.
This morning, The Wall Street Journal reported that Comcast is exploring deals with other companies and private equity firms, looking for options in case the bidding approaches that lofty level.
Last week, Fox agreed to Disney’s revised bid of $71.3 billion in cash and stock, which came after Comcast overrode Disney’s original $52 billion all-stock deal by offering $65 billion in cash. Comcast has yet to counter Disney’s latest offer.
In one scenario reported by WSJ—one Comcast is reportedly exploring—an investment partner would acquire the U.S. Fox assets, while Comcast would assume international components like the U.K.’s Sky and India’s Star.
Meanwhile, in a regulatory filing Tuesday, Fox revealed that its board is concerned about Comcast’s ability to get a deal past the Justice Department’s antitrust regulators. “A strategic transaction with Comcast continued to carry higher regulatory risk leading to the possibility of significant delay in the receipt of merger consideration as well as the risk of an inability to consummate the transactions.”
The Fox board cited the cable operator’s previously unsuccessful attempt to acquire Time Warner Cable, as well as complications that could arise with what would be an increased stake in video streamer Hulu.