Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever

Robert Iger, chairman and chief executive officer of Walt Disney Co. and Brian Roberts, Comcast chairman and CEO.

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Robert Iger, chairman and chief executive officer of Walt Disney Co. and Brian Roberts, Comcast chairman and CEO.

Disney and Comcast are currently locked in a transatlantic bidding war for one of the entertainment industry’s most coveted assets.

The skirmish to control some of Rupert Murdoch’s global empire comes as some of the worlds’ most influential media moguls try to find ways to stay relevant at a time when American consumers are cutting their cable subscriptions and spending more time online.

The rapidly changing media landscape is forcing legacy entertainment giants to consider spending tens of billions of dollars in order to keep pace with upstarts like Netflix and Amazon. But where Comcast and Disney’s battle will end up is still very much in the air.

CNBC takes a look at how things stand in one of the most intriguing global media battles in decades.

Disney vs. Comcast

Disney CEO Bob Iger and Comcast CEO Brian Roberts are in direct competition over Twenty-First Century Fox and Sky for one overarching reason: internet streaming.

American consumers have been scrapping their cable television subscriptions in order to snap up entertainment offers from Netflix, Amazon and Hulu instead. That has significantly dented media companies’ profits, forcing them to consider consolidation as a means to remain competitive.

The allure of owning Murdoch’s Fox is that Comcast and Disney would then make their own streaming television services much more compelling — given Fox’s iconic entertainment assets range from “The Simpsons” to the “X-Men” franchise.

Moreover, owning Fox would also give Comcast or Disney majority ownership over one of the very few genuine rivals to Netflix. That’s because, alongside Comcast and Disney, Fox currently holds a 30 percent stake in Hulu.

Why is Sky so important to a deal?

Fox owns a 39 percent stake in British broadcaster Sky. And the European pay-television group boasts a market-leading platform that is thought to have approximately 23 million customers across the continent.

The appeal of Sky to the likes of Comcast or Disney is such that owning the firm would give them both a rare opportunity to diversify out of the U.S. and reach consumers more directly.

Simon Dawson | Bloomberg | CNBC

“If you look at Comcast and Disney, what they seem to want to do is increase their distribution network. Particularly if you take Sky … It gives you the number one pay-TV operator in the U.K., Ireland, Germany, Italy (and) exposure in Spain and Switzerland. That’s very powerful,” Ian Whittaker, media equity researcher at Liberum, told CNBC’s “Squawk Box Europe” late last month.

Sky also has a range of other sought-after television content, most notably rights to show English Premier League soccer matches.

Comcast’s Brian Roberts has previously said the appeal of Sky left him feeling “terribly impressed,” while Disney’s Bob Iger called the British broadcaster the “crown jewel” of Fox’s television and movie assets.

So what has been offered so far?

On July 11, Comcast raised its cash offer for Sky to $34 billion, topping Fox’s much-improved offer for the same company. Comcast said its renewed bid had been recommended by the independent committee of Sky. The company also said it had earmarked funds to fulfill the terms of the deal.

Just hours earlier, Fox had raised its offer to about $32.5 billion. Fox had originally reached a deal in December 2016 to buy the part of Sky it does not already own.

When the deal was first proposed, U.K. regulators expressed concerns that the merger would give Murdoch too much control over British television and newspapers. However, the U.K. government has since given the green light to a takeover of Sky by Fox.

Rupert Murdoch

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Rupert Murdoch

“For now, Comcast is in pole position. The speed of its counter bid underlines its desire to buy Sky. It might lose out to Disney for Twenty-First Century Fox but is adamant not to lose out on the ownership of Sky,” Paolo Pescatore, an independent telecom and media analyst, told CNBC via email.

Pescatore added: “(I’m) expecting another round of bids and that will probably be it. The offer from Twenty-First Century Fox left the door widely open. Slowly closing now! The ball is now firmly in Murdoch’s and Disney’s court.”

On June 20, Disney upped its bid for the Fox assets to $71.3 billion — raising the stake of its previous offer of $52.4 billion. Fox has since accepted the bid.

Meanwhile, Comcast’s current offer for Fox stands at $65 billion — and sources told CNBC’s David Faber Monday that bid could prove to be the final offer Roberts decides to submit. Instead, Comcast may solely focus on Britain’s Sky television.

Analysts say Fox prefers Disney to Comcast because it considers Iger’s stock more valuable and worries a deal with Comcast might come unstuck amid regulatory hurdles.

What happens next?

Now Fox has received the green light from Britain’s government to buy Sky, Fox must decide whether to submit a new offer. As it stands, Comcast’s offer is at a premium to Fox’s bid.

To make things slightly more complicated, a renewed bid from Fox could create another headache regarding a Disney-Fox merger agreement. To bypass this potential stumbling block, Disney might be tempted to make its own outright bid for Sky.

When asked whether he believed some of the world’s largest tech giants could eventually try to outbid Disney and Comcast, Liberum’s Whittaker said that while FANGs (Facebook, Amazon, Netflix, Google) certainly had the “cash power” to do so, it did not appear to be a strategic priority for them.

“In the case of Facebook and Google, they have been concentrating on advertising more than anything else. Netflix has pay-TV subscribers but a different model to the traditional pay-TV side and Amazon … Well, it remains to be seen what they do,” he added.

To be sure, a successful takeover of Fox is likely to rank as one of the priciest media deals of all time.

Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.

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