Comcast seeks more cash in pursuit of 21st Century Fox assets

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Why Fox could pick Disney over Comcast in bidding war

Tigress Financial chief investment officer Ivan Feinseth and “Media Buzz” host Howard Kurtz on why 21st Century Fox could pick Disney over Comcast.

Comcast Corp. is exploring tie-ups with private-equity investors or strategic partners that could provide additional capital as the cable giant pursues a costly acquisition of 21st Century Fox's entertainment assets, according to people familiar with the situation.

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Comcast, which is bidding for the coveted media assets against rival Walt Disney Co., has no immediate plans to tap such funding sources. But it may look to do so should the bidding reach extremely high levels -- in the $90 billion range or so, the people said.

A strategic investor could team up with Comcast, taking on the U.S. Fox assets that are in play -- including the Twentieth Century Fox studio and regional sports networks -- while leaving Comcast with international businesses such as European pay TV giant Sky PLC and Star India.

It's unclear who potential strategic partners might be. Tech companies or traditional media outfits could each be candidates, one of the people familiar with the situation said. Earlier talks between Comcast and Amazon.com Inc. ended without a partnership, The Wall Street Journal reported.

Disney and Fox reached a $52.4 billion all-stock deal in December, which Comcast topped June 13 with a $65 billion all-cash offer. Disney took pole position once again last week, agreeing to a revised merger pact with a $71.3 billion price and a target of 50% stock consideration.

Comcast is reviewing all options, including coming back with a substantially higher offer or whether to continue the hunt at all, the people familiar with situation say.

Comcast doesn't feel pressure to act immediately, since Disney and Fox have indefinitely postponed a shareholder meeting previously scheduled for July 10, the people say.

Fox News and Fox broadcast network are not part of the deal and would be spun off into a new company if a deal is reached.

21st Century Fox and Wall Street Journal-parent News Corp share common ownership.

Fox's board chose to stick with a Disney deal not just because of the price, but other factors including the potential regulatory risks of a Comcast tie-up, according to a proxy filing this week. Comcast believed the path was cleared for its proposed deal when a federal judge on June 12 shot down the Justice Department's attempt to block AT&T Inc.'s takeover of Time Warner Inc., according to people close to the cable company.

But Fox believes regulators could still raise concerns about a deal with Comcast that could lead to a rejection, delay in deal approval or significant divestitures, according to the filing. Fox felt the Disney deal would have an easier time in Washington and is already making progress toward antitrust approval, the filing said.

A partnership with private equity may be more likely, some of the people familiar with the situation said.

One benefit of teaming up with a strategic investor for Comcast: It could offload some U.S. assets like the sports networks or studio, nullifying or substantially reducing any regulatory uncertainty, one of the people familiar with the situation said.

Both Disney and Fox must weigh the risks of ratcheting up the bidding. The notion of Comcast pursuing a major transaction has weighed on its shares this year, though there has been a slight rebound recently.

If Comcast chooses to use its stock as a currency to reduce the debt load in a deal, that could be interpreted as a U-turn by Wall Street. The company's chief financial officer in April said it was unlikely to use stock as a currency with its shares under pressure.

Disney also must manage its investor base. The entertainment giant is making a big gamble that buying Fox's assets will help it build a direct-to-consumer streaming business that can rival Netflix Inc.'s.

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