Question

Case – Disney

Washington Post

“Comcast’s $65 Billion bid set up Disney Dual,” June 14, 2018

Steven Zeitchik

“Comcast made a $65 billion bid Wednesday for 21st Century Fox in what is expected to be the first of many attempts to buy up pieces of the entertain world after AT&T’s decisive legal victory over the government to buy Tim Warner. The offer sets up a battle of wills between two of the most dominant entertainment companies in the world – Walt Disney, which offered $52.4 billion for Fox last year, and Comcast, the nation’s leading cable company, which already owns Universal Studios and NBC.”

Comcast's offer, representing a 19% premium to Disney's all-stock offer, launches a bidding war for Fox studios and networks that both companies see as integral to becoming stronger competitors in a rapidly changing media landscape. "We firmly believe that the truly great media companies of the next century will be large, integrated entities with multiple growth engines across a wide swath of the global entertainment industry," Comcast CEO Brian L. Roberts said during a conference call late Wednesday. Comcast also offered to reimburse the $1.5 billion breakup fee Fox would have to pay Disney.

You work for the CEO of Disney. The question is now to bid or not to bid. Comcast just made an offer to acquire 21st Century Fox. Should Disney increase its bid to cover Comcast's offer? Please write a report suggesting a course of action to Disney (increase bid or withdraw), justifying your choices. If your choice is "withdraw", please provide other alternatives for Disney (e.g., what else they can do with the money they would spend on Fox). If your choice is "increase bid", please describe how you would manage the post-merger integration process.

Answer 1

Answer )

21st Century Fox is dealing primarily in the film and television industries. It is consider as the United States' fourth-largest media conglomerate on the basis of market share after The Walt Disney Company, Comcast and Warner Media. There is bidding war between top two comapnies ,Disney and Comcast , to takeover whole business of the firm. As CEO of Disney, we should increase our bid to beat Comcast in the war . Disney should not only increase the takeover bid but also set a target to get benefit from operational synergy .

In case of increase in bid the integration process will be as follows:

• The payment to Disney shareholders can be done by use of issue of new security in the market
• Selling of assets of 21st century fox after acquisition can be one method of immidiate fund raising\
• Mortgage loan against the properties of 21st century fox after acquisition can be one method of immidiate fund raising
• Disney can enter with joint venture with other company to take over the business of 21st century.