Comcast will make Disney pay top dollar for Fox, even if it can’t win bidding war, analyst says

Comcast
In addition to trying to outbid Disney for a globally situated collection of Fox entertainment assets, Comcast is trying to outbid Fox for U.K. satellite TV operator Sky. Driving up Disney's purchase price for Fox would serve that latter goal. (Comcast)

With Disney’s rival $71.3 billion bid for 21st Century Fox already approved by the DOJ and favored by the Fox board, Comcast faces an uphill battle to win its M&A prize. 

But just because the cable conglomerate is now a heavy underdog to win the Fox entertainment assets doesn’t mean it won’t continue to compete with Disney 

“Just because Disney will probably win, it doesn’t follow that Comcast should walk away. Comcast should force Disney to pay every penny they can to win,” New Street Research analyst Jonathan Chaplin told the Philadelphia Inquirer. “The more Disney uses their available resources to win Fox, the less they have left to compete for Sky. Remember, there are two contests here. Comcast doesn’t have to lose both. If Comcast could pick just one asset among all the assets on the table, it would probably be Sky.”

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In addition to trying to outbid Disney for a globally situated collection of Fox entertainment assets, Comcast is trying to outbid Fox for U.K. satellite TV operator Sky. This business is still coveted by Comcast, which is trying to diversify into the global marketplace and compete with Netflix in digital streaming. 

Eric Schiffer, chairman of private equity firm Patriarch Organization in Los Angeles, confirmed to Comcast’s hometown newspaper that the bidding war is only in the middle innings. 

“It’s not over," he said. “Comcast will dig in because they see this as a historic moment to strike.”

Schiffer added that Disney “won’t back away. It will fight this to the end. And at some point this will be difficult for Comcast financially.”

Comcast is reportedly in talks with various private equity firms, trying to come up with a counterbid that mitigates some of the large debt it would take on amid a successful purchase.