Media Analyst: Fox Wants To Shed Assets Because It Can't Compete Anymore

In a surprising development in the media sector, Twenty-First Century Fox Inc (NASDAQ: FOXA) was in talks to sell most of its media and entertainment assets to Walt Disney Co (NYSE: DIS). For the time being, talks appear to no longer be ongoing although this could change.

The Analyst

MoffettNathanson's Michael Nathanson.

The Thesis

From a historical point of view, Fox has been the company "looking to buy something" while Disney has historically been a company "looking to get out of something," Nathanson said as a guest on CNBC's "Squawk Box" segment. As such, the reports of a "role reversal" deal was a surprise to many but may go to show that Fox is a "cheap company" with "cheap assets."

But Fox's assets are valued so poorly because it can't compete over the long-term against a company like Disney, he said. As such, the company is better off now being a seller of assets instead of "fighting this fight." Rather, the company should be looking to take itself private with the Murdoch family holding ultimate control.

"It would make sense if you are the Murdoch family," he said. "Go private. Who needs the spotlight? It generates a ton of cash flow. Who wants to deal with [Wall Street analysts] every quarter? It's a pain."

Price Action

Shares of Disney were higher by 1 percent at $101.61 on Tuesday.

Shares of Twenty-First Century Fox were also up about 1 percent at $27.75.

Related Links:

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Sorry, Mickey: Why This Analyst Is Reducing Disney's Q4 Earnings Projection

Image Credit: 21st Century Fox [Public domain or Public domain], via Wikimedia Commons