Market Overview

The Disney-Fox Deal: With Great Power Comes Great Regulatory Risk

Share:
The Disney-Fox Deal: With Great Power Comes Great Regulatory Risk
Related DIS
Tesla Changes Up Its General Counsel After Tough Year In Legal
Netflix To 'Friends' Fans: We'll Be There For You (For Another Year)
Invesco S&P 500 Quality ETF (SPHQ) November Summary (Seeking Alpha)
Related FOXA
Facebook Acquires Rights To 'Buffy The Vampire Slayer,' Other Classic Shows
JPMorgan Sees 20% Upside For WWE, Multiple 2019 Catalysts
U.S. Fixed Income Calendar: The Week Ahead (Dec 10-14) (Seeking Alpha)

After Walt Disney Co (NYSE: DIS) confirmed it has reached an agreement to acquire most of Twenty-First Century Fox Inc (NASDAQ: FOXA)'s media and entertainment assets, investors can move to questioning the likelihood of the deal being approved by the regulatory bodies.

The Analyst

KeyBanc Capital Markets' Andy Hargreaves downgraded Fox's stock from Overweight to Sector Weight with no assigned price target.

The Thesis

The likelihood of antitrust risks from the deal appear high given Disney's potential share of theatrical revenue, share of domestic cable assets, and a strong position in sports, Hargreaves said in a note. It shouldn't come as a surprise if rival domestic MVPDs, theater owners, and even sports leagues oppose the deal through the regulatory process. On top of that, the regulatory environment is already "highly uncertain," which adds another risk to the deal.

Nevertheless, the merger of the two companies is a positive for both parties, Hargreaves said. On Disney's end, the merger improves its positioning in pay TV, film, sports, and non-sports over-the-top offerings. On Fox's end shareholders will be better positioned to "participate in the improved odds of success" given a greater scale while at the same time holding on to Fox's remaining assets in the highly profitable domestic TV business.

Price Action

Shares of Fox were trading flat Friday morning, while shares of Disney were higher by around 0.3 percent.

Related Links:

Hollywood News Dominates Wall Street Today As Disney Announces Big Merger

Pivotal Breaks Down The Disney-Fox Bid

Latest Ratings for DIS

DateFirmActionFromTo
Nov 2018Imperial CapitalUpgradesIn-LineOutperform
Nov 2018ArgusMaintainsBuyBuy
Oct 2018BarclaysUpgradesEqual-WeightOverweight

View More Analyst Ratings for DIS
View the Latest Analyst Ratings

Posted-In: Andy Hargreaves entertainment KeyBanc Capital Markets media streaming video tvAnalyst Color Analyst Ratings Best of Benzinga

 

Related Articles (DIS + FOXA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
MOSJP MorganDowngrades33.0
BACKeefe Bruyette & WoodsDowngrades29.0
AMTMorgan StanleyDowngrades170.0
EBAYMorgan StanleyDowngrades33.0
UNITMorgan StanleyDowngrades16.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Looking At ViaSat As A Possible Investment? Patience Is Required, Says Morgan Stanley

The Market In 5 Minutes: CSX CEO, Overstock, Net Neutrality, Amazon Prime, And More