Cable giant Comcast has launched a hostile bid for 21st Century Fox, the media empire controlled by Rupert Murdoch.
The $65bn bid, made on Wednesday afternoon, comes in a week of seismic change for the media industry. On Tuesday, a judge threw out US government objections to AT&T’s takeover of Fox’s rival Time Warner.
That decision had widely been interpreted as a signal that Comcast would make a play for Fox, which is currently negotiating a merger with Walt Disney.
The all-cash offer is about 19% higher than Disney’s $52.4bn offer, Comcast said, and is likely to spark a bidding war with Disney that could last months. In a statement, Fox said it would “carefully review” the “unsolicited” offer.
The reordering of the media landscape comes as cable, telecoms and media companies scramble to compete with tech companies including Amazon, Apple and Netflix, which are spending billions to develop their own empires.
Five years from now there will be “three or four large, vertically integrated conglomerates with presence in wireline, wireless and content” competing with each other and the Silicon Valley giants, Barclays analysts said Wednesday.
Advocacy group Free Press was quick to criticize the deal. “We simply don’t need the country’s biggest cable company and broadband provider controlling even more content and taking even more of our money every month,” said research director Derek Turner. “This merger will further strengthen Comcast’s hand, making it far more difficult for rivals to compete.”
Comcast, which already owns NBCUniversal, is the US’s largest cable company and is likely to face regulatory scrutiny should Fox consider its bid.
But on Tuesday, Judge Richard Leon threw out the justice department’s objections to AT&T’s takeover of Time Warner. AT&T is the US’s second largest mobile phone operator and also owns the satellite TV broadcaster DirecTV.
The justice department, and Donald Trump, had argued the deal would concentrate too much power in one set of hands and that AT&T could use the power of Time Warner’s content, which includes hit shows like HBO’s Game of Thrones and the Warner Brothers movie catalogue, to force rival carriers to pay higher prices that would be passed on to the consumer.
But Leon rejected all of the government’s arguments in a stunning rebuttal to the justice department. Leon ruled it had failed to prove that the deal would suppress competition in the pay-TV industry.
In a letter to Murdoch and his sons, Lachlan and James, Comcast’s chairman, Brian Roberts, wrote: “We have long admired what the Murdoch family has built at 21st Century Fox. After our meetings last year, we came away convinced that the 21CF businesses to be sold are highly complementary to ours, and that our company would be the right strategic home for them.”
Roberts said he had been “disappointed” that Fox had entered into negotiations with Disney but was “highly confident” that his new offer would be approved by regulators.
Fox is selling its famous film studio, networks National Geographic and FX, its stake in British satellite TV business Sky and Asian pay-TV operator Star TV, among other assets. Comcast made a bid for all of Sky in April and will pursue both mergers simultaneously.
Murdoch’s decision to sell will leave the family with a far smaller media business consisting of Fox News and sports channels and its news media business, which includes the Wall Street Journal, the Times and the Sun.
The surprise decision was announced last December. “Are we retreating? Absolutely not,” said Rupert Murdoch in a conference call. “Those who know me know I am a news man with a competitive spirit. Fox News is probably the strongest brand in all of television. We are pivoting at a pivotal moment.”