Disney readies divest package for Twenty-First Century Fox deal, sources say
05 OCT 2018
The Walt Disney Company’s [NYSE:DIS] sale of 22 regional sports networks to secure antitrust approval to acquire much of Twenty-First Century Fox [NASDAQ:FOX] is still at an early stage, three sources briefed on the situation.
While the process is yet to launch formally, at least a handful of financial sponsors have started conversations about financing with banks given the size of the asset, two of the sources said. One of the sources briefed said the deal size is around USD 25bn in enterprise value.
In June, the Burbank, California-based media and entertainment company reached a settlement with the Department of Justice for its USD 71.3bn deal to acquire most of New York-based peer Fox. Last month, this news service reported that JPMorgan, Disney's advisor on the Fox deal, along with Allen & Co were advising Disney on the disposals.
Comcast [NASDAQ:CMCSA] is among the suitors eyeing some of the RSN assets, two of the sources briefed said.
One of the sources, however, cautioned that Comcast and Fox may have overlaps in a few RSN markets and, therefore, Comcast is unlikely to acquire the whole portfolio.
Last month, Comcast outbid Fox to acquire 61% of UK television company Sky for around USD 39bn after a few rounds of bidding. This week, Fox announced it was selling its 39% stake in Sky to Comcast for over USD 15bn, paving the way for Comcast to own 100% of Sky.
Financial sponsors are expected to compete heavily with a limited number of strategics for these prized assets, the sources noted. The RSNs hold the rights to attractive sports content at a time when such content is considered key to holding together the traditional TV ecosystem.
This news service previously reported that Apollo Global Management [NYSE:APO] is taking a look at the divestitures, and that local broadcasters like Sinclair Broadcast Group [NASDAQ:SBGI] could also be suitors, either alone or in partnership with sponsors.
Financial sponsors CVC Capital Partners and The Blackstone Group [NYSE:BX], as well as technology companies like Amazon [NASDAQ:AMZN] and Alphabet’s [NASDAQ:GOOG] YouTube, are also evaluating the RSNs, according to a report by Bloomberg.
The Information further reported that the part of Fox not involved in the merger could be interested in buying the networks back, while James Dolan, head of MSG Networks [NYSE:MSGN], told NBC News that he could also take a look.
Private equity could look to pitch cable companies like Charter Communications [NASDAQ:CHTR] on a joint bid, as reported.
Guggenheim Partners is also advising Disney along with JPMorgan, while Cleary Gottlieb, Covington & Burling and Cravath, Swaine & Moore are its legal advisors on the overall Fox deal.
Comcast declined comment. Disney did not respond to requests for comment.