Fox hunt heats up as Comcast prepares to duel with Disney over Rupert Murdoch’s company

Sky might not be the limit for Comcast Corp., which is mulling a hostile bid for 21st Century Fox assets, a move that could upend efforts by Walt Disney Co. to buy much of Fox from Rupert Murdoch.

Comcast has been exploring a bid that would eclipse Disney’s $52.4-billion offer, according to two people close to the situation who were not authorized to comment.

Late Monday, Reuters reported that the Philadelphia-based cable giant was lining up financing to make an all-cash bid for Fox’s vaunted TV and movie studio, FX, National Geographic channels, nearly two dozen regional sports networks and control of the online streaming service Hulu.

A new Comcast bid would be a direct challenge to Disney Chief Executive Bob Iger, whose effort to buy much of Fox was seen as a bold move to cement his legacy and secure Disney’s future. The Burbank entertainment conglomerate now might have to raise its bid considerably for Fox. Murdoch, too, would be in a tight spot because he would have to justify to shareholders accepting a lower amount when Comcast was offering more money.

Brian Roberts, chairman and chief executive of Comcast, is expected to decide in June whether to launch a hostile bid for Fox. The power play could determine which media company will end up being the dominant player in Hollywood.

In addition to its pay TV and internet service business, Comcast owns NBCUniversal, whose assets encompass the NBC broadcast network, cable channels USA, Bravo, Golf Channel and NBC Sports, movie studio Universal Pictures and the Universal Studios theme parks.

Media businesses are scrambling to bulk up to battle the tech giants — Facebook, Google, Netflix and Amazon.com — that are rushing into entertainment.

“The big media companies are seeing the handwriting on the wall — everything is moving online,� said Tony Lenoir, senior analyst at Kagan, a research arm of S&P Global Market Intelligence. “They are not waiting for more cord-cutting pain.�

Investors on Tuesday were unfazed by the news that Fox might still be in play. Fox’s stock slipped 5 cents to $37.99 a share. Fox’s shares are up nearly 50% since early October. Comcast stock was down 5.6%, or $1.80, to $30.59. Disney shares fell 72 cents to $101.76.

Comcast and Fox declined to comment. A Disney representative was not immediately available.

In an interview with CNBC, Iger said he would not “speculate at all about what they are doing or why they are doing it,� referring to Comcast. “I can only say, and reiterate, that we made a deal in December that received unanimous approval, which is important, by the 21st Century Fox board.�

He added: “We are certainly excited about that acquisition, and we are going to remain confident that it’s going to go forward.�

Comcast already made one run at Fox last fall, but Murdoch passed on the offer, opting instead for the all-stock bid from Iger. That deal had tax advantages and would allow Fox shareholders, including the Murdoch family, to become major shareholders in Disney.

Nonetheless, some analysts have been betting that Comcast would not fade away so easily. Comcast last fall had offered more than $60 billion for the Fox assets — about 15% more than Disney — and is expected to offer that much or more should it try again.

Comcast is hungry to grow.

“We are focused on where we can enhance our position through scale with complementary businesses that provide us with new capabilities, new markets and other growth opportunities,� Roberts told analysts in Comcast’s first-quarter earnings call last month.

Comcast recently formalized its $31-billion bid to buy all of European satellite-TV provider Sky, which Fox has been trying to acquire for nearly 17 months. Fox owns 39% of Sky — which provides TV service in Britain, Ireland, Italy, Germany and Austria — but British regulators have been cool to the Murdoch family, worrying that it already has too much influence in British media without owning Sky.

Disney has said it would buy Sky if necessary. There are only two bids on the table: the one from Comcast and the smaller Fox offer.

“We value Sky, obviously, we are certainly impressed by the talent that is there, and the quality of their product,� Iger told analysts in an earnings call Tuesday.

The outcome of legal proceedings in Washington is expected to influence Comcast’s decision about whether to bid again for Fox. U.S. District Judge Richard Leon plans to announce June 12 whether AT&T will be allowed to buy Time Warner Inc., which owns CNN, HBO and Warner Bros. studio — an $85-billion deal that the U.S. Justice Department wants to block.

If the courts permit AT&T to buy Time Warner, Comcast would be emboldened to go after Fox once again because the regulatory hurdles might not be as high as first feared. Murdoch has said he rejected Comcast’s offer last fall because a deal with Comcast might not pass regulatory muster.

“If AT&T Time Warner is ruled legal and closes, we expect a new Comcast bid for Fox immediately,� BTIG Research analyst Richard Greenfield said in a note Monday night.

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UPDATES:

3:40 p.m.: This article was updated with comments from Bob Iger.

1:40 p.m.: This article was updated with analysts’ comments.

May 8, 7:35 a.m.: This article was updated with information from Tuesday’s stock market trading.

This article was originally published at 7:05 p.m. May 7.