The news last week that Comcast might press ahead with an attempt to buy a bulk of 21st Century Fox assets out from under Disney has set off alarm bells — and questions.
How serious is Comcast? How much higher would its offer need to be for 21st Century Fox shareholders, who will vote the second week of July, to accept it? And how close would Disney need to be to get in a counteroffer? (Some analysts project Comcast’s offer will be as much as 15 percent higher than Disney’s $52.4 billion bid, in an all-cash deal instead of an all-stock one.) And what would be the place of James and Lachlan Murdoch, scions of Rupert, in a non-Disney world?
But beyond the analysis of endgames and potential outcomes lies another question: What would Comcast look like if it owned Fox?
We know how a Disney-Fox acquisition would look. Essentially, Disney would use Fox’s TV studio as a key small-screen pipeline and Fox’s film studio to populate its streaming service and/or integrate it with Disney theatrical properties.
But what Comcast — owner of cable distribution, networks such as NBC and Bravo and prolific film and television studios, such as Universal — would do with the Fox portfolio has been far less explored.
Here, then, are four areas where a Comcast-Fox combination would provide intriguing possibilities —and challenges — in ways that Disney-Fox might not.
The appeal: Universal needs movie franchises — badly. Right now it has some but not a lot. The animated world of the Minions, the revived Jurassic Park franchise and the Fast and Furious series are the top tier. That’s not shabby, but it’s not exactly riddled with upside, either.
Fox, however, comes with sterling wares, not least of which is James Cameron’s planned “Avatar” sequels. The idea of Hollywood’s most reliable blockbuster generator — the director has two of the four all-time-highest-grossing films domestically — on tap to make several movies following up on one of his blockbusters is nothing to sneeze at. And then there are Marvel titles, especially in the X-Men family. All of this is also a lot newer than Jurassic Park and Fast and Furious, which go back, respectively, a quarter-century and eight movies.
The hurdle: What Universal really needs is, well, a universe — a group of characters that will spin out a hit once or twice each year and save executives the need to scramble each time out. A Star Wars, say. (Yes, even with the “Solo” drop-off.) Cameron is too unreliable for this. He’s made one feature in 20 years. And the X-Men movies, while they continue to throw off dollars, can still feel like also-rans to the Avengers crew, which is in the Disney-Marvel stable.
The appeal: Disney doesn’t need a sports network. It already has its hands full with ESPN, which was once a cash cow but has lately been hobbled by the cable opt-outs of a younger generation. But NBCSN, which has mostly been engaged in a battle for second place, needs a boost. And it could benefit from Fox’s 44 regional sports networks that would come along as part of the deal, both as talent pipelines and promotional platforms.
The hurdle: NBCSN’s major issue has been live events. Namely, it has many of the lower-profile sports, such as tennis, horse racing and, beautiful as it is, hockey. The regional sports networks don’t give it those rights packages. On top of that, many of the major sports assets — including Fox’s baseball and football packages — would stay with Rupert Murdoch’s family in the streamlined company. That dulls the luster.
The appeal: Fox has one of the strongest TV studios out there, churning out hits that win awards and garner big viewership. (“This Is Us” and “Modern Family,” most notably.) Bringing 20th Century Fox Television in-house would offer Comcast an advantage similar to what it would give Disney. NBC could take advantage of “This Is Us” being produced by its home studio the way ABC could with “Modern Family.” In-house also means a company can reap the secondary benefits from foreign and other forms of licensing, for instance, because it’s a producer on the show.
The hurdle: Unlike Disney, Comcast already has a large TV studio in Universal Television. That means it needs 20th Century Fox TV less than Disney, which lacks a major TV-studio player. It also means integration could be tricky. Universal has shows such as the Dick Wolf-produced law, cop and medicine dramas and the upstart fantasy-comedy “The Good Place.” How the infrastructure that produces those shows would coexist with the one producing 20th Century Fox shows remains a big question. Would they be combined, which could be messy, or exist side by side, which could be inefficient?
The appeal: The Fox assets would come with a 30 percent stake in Hulu, which would fit nicely with Comcast’s own 30 percent stake in Hulu. And — double whammy — it would keep Disney from getting the stake to add to its 30 percent. Essentially, the winner of the Fox assets gets the bonus prize of a majority ownership in Hulu. In an age when streaming and direct-to-consumer relationships are key in entertainment, that’s never a bad thing.
The hurdle: Majority ownership isn’t full ownership. Comcast would also have the headache of dealing with the owner of the remaining 40 percent of Hulu (30 percent of which would be Disney, newly miffed about having Fox snatched from under it). Or Comcast would bear the cost of buying out Disney.
And there’s another snag. Comcast makes a lot of its revenue from its distribution business — i.e., traditional cable. And growth in streaming tends to signal a diminution in traditional cable. Making Hulu too successful would mean Comcast’s core business is faltering; pushing it too little would mean it’s probably not worth the ownership stake. As with other areas of a Fox acquisition, there’s a pitfall for every benefit.