Comcast walks away from Fox takeover fight

Comcast said it has dropped its pursuit of a group of media assets owned by Twenty-First Century Fox and will focus on its offer for European pay-TV group Sky Plc.

Shares of Comcast were up 2.2 per cent in premarket trade, while Fox fell 1 per cent. Shares of Walt Disney, which has agreed a deal to buy the Fox assets, were up marginally.

“Comcast does not intend to pursue further the acquisition of the Twenty-First Century Fox assets and instead will focus on our recommended offer for Sky,” the company said on Thursday.

Disney fended off Comcast’s $66 billion all-cash challenge to its deal for the Fox assets last month by sweetening its offer to $71 billion in cash-and-stock. Time had run out for Comcast to come back with a new offer, with Fox shareholders scheduled to vote on the Disney deal on July 27th.

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While Comcast is dropping its pursuit of much of Rupert Murdoch’s empire, it did force Disney to pay a higher price for the Fox assets, which also include a movie studio and cable networks FX and National Geographic.

Comcast dropped its bid for the Fox assets because of concerns about price, divestitures it might be required to make to complete the deal and the impact on the value of its bid for Sky, sources familiar with the matter said.

Last month, Disney won US antitrust approval for its purchase of Fox’s assets, giving it a potential edge in the contest. Comcast had weighed whether to team up with private equity investors in its pursuit of Fox assets, a person familiar with the situation said. Like Disney, Comcast would have had to take on an intimidating debt load to finance the deal. After Disney’s latest bid, Moody’s threatened to cut its credit rating. Now, the battleground shifts to Europe.

The cable operator will now focus on the $34 billion offer to acquire 61 per cent of Sky. Fox, which owns 39 per cent of Sky, has been also seeking to acquire the majority stake.

The fight for Sky is part of a bigger battle being waged in the entertainment industry as the world's media giants splash out tens of billions of dollars on deals to be able to compete with Netflix and Amazon. com.