An SEC filing rendered by engaged corporate citizens 21st Century Fox and the Walt Disney Company has delivered the most meaningful insight yet as to why the former rejected Comcast’s merger overture in favor of Disney.
In December, Fox agreed to sell its entertainment networks, movie studios and television production and international assets, as well as its stake in Hulu, to Disney for $52.4 billion, rejecting what had previously been an unspecified overture from Comcast.
The SEC filing—obtained by the Wall Street Journal and numerous other business news outlets on Thursday—revealed that Comcast’s bid was actually valued at 16% higher. Fox chose Disney due to antitrust concerns—company executives wondered how the Justice Department could green light the merger of a telecom and media company at a time when it’s trying to stop AT&T from buying Time Warner Inc. After what were reported to be extended discussions, Fox’s board of directors decided a Comcast deal would be too risky.
Fox also had concerns about Comcast’s stock, which it felt hasn’t traditionally been as valuable compared to Disney’s. Meanwhile, Disney offered to compensate Fox up to $2.5 billion if regulators halted the proposed merger.
Comcast isn’t referenced by name in the filing but is instead referred to as “Party B.” For Fox, laying out the timeline and rationale for the Disney deal is a way of informing its investors why it chose a lower bid.
According to the filing, Fox Executive Chairman Rupert Murdoch and Disney CEO Robert Iger first discussed a possible merger in early August of last year during a meeting in Los Angeles. When reports of those talks surfaced in November, Comcast CEO Brian Roberts contacted Murdoch and pitched his own merger proposal.
The filing described Fox executives as leery of Comcast’s regulatory reputation from the beginning—worries not soothed through several months of proposed remedies by Comcast. Ultimately, Fox’s board chose Disney over the cable giant at a December 6 board meeting.
Notably, however, the saga is far from over. Comcast subsequently outbid Fox in the latter’s attempt to purchase the remaining portion of U.K. satellite operator Sky that Fox didn’t already own.
However, Comcast’s decision not to finalize its $31 billion bid is serving a strategic purposes, the WSJ noted, keeping Comcast’s options open to acquire the Fox assets.