Comcast backs out of Fox deal, paves way for Disney

Comcast is dropping its bid for Fox’s entertainment businesses, paving the way for Disney to boost its upcoming streaming service by buying the studios behind “The Simpsons” and X-Men.

Getting Fox would help the House of Mouse compete with technology companies such as Amazon and Netflix for viewers’ attention — and dollars.

Disney needs compelling TV shows and movies to persuade viewers to sign up and pay for yet another streaming service. It already has classic Disney cartoons, “Star Wars,” Pixar, the Muppets and some of the Marvel characters. With Fox, Disney could add Marvel’s X-Men and Deadpool, along with programs shown on such Fox channels as FX Networks and National Geographic. Fox’s productions also include “The Americans,” ″This Is Us” and “Modern Family.”

The deal would help Disney further control TV shows and movies from start to finish — from creating the programs to distributing them through television channels, movie theatres, streaming services and other ways people watch entertainment. Disney would get valuable data on customers and their entertainment-viewing habits, which it can then use to sell advertising.

For Comcast, dropping the pursuit of Fox lets it focus on getting European pay-TV operator Sky, a deal that would help the Philadelphia-based cable and media company expand beyond the U.S.

Fox shareholders are to vote on the Disney deal on July 27.

Cable and telecom companies have been buying the companies that make TV shows and movies to compete in a changing media landscape. Although internet providers like AT&T and Comcast directly control their customers’ access to the internet in a way that Amazon, YouTube and Netflix do not, they still face threats as those streaming services gain in popularity.

AT&T bought Time Warner last month for $81 billion and has already launched its own streaming service, Watch TV, with Time Warner channels such as TBS and TNT, among other networks, for $15 a month.

Expect something similar from Disney after the deal closes. In addition to boosting the Disney streaming service, expected to debut next year, the deal paves the way for Marvel’s X-Men and the Avengers to reunite in future movies. Though Disney owns Marvel Studios, some characters including the X-Men had already been licensed to Fox.

Disney would also get a controlling stake in the existing streaming service Hulu.

Separately, Disney said it will release new episodes of the “Star Wars” animated series “The Clone Wars” on its upcoming streaming service. The original “Clone Wars” series ran for six seasons, with the final one as a Netflix exclusive.

Comcast said Thursday that it would not raise its $66 billion offer for Fox. The Walt Disney Co. had topped Comcast’s bid by offering $71 billion. The U.S. Department of Justice has approved Disney’s bid as long as Disney, which owns the national sports network ESPN, sells Fox’s 22 regional sports networks. Disney may still need regulatory approvals outside the U.S.

Disney CEO Bob Iger said he was “extremely pleased” with Comcast’s announcement.

“Our focus now is on completing the regulatory process and ultimately moving toward integrating our businesses,” he said in a statement.

GBH Insights analyst Daniel Ives called Comcast’s move “the final chapter in this soap opera.” He said Comcast’s focus now is on getting Sky “to build a strong beachhead content strategy in Europe.”

Sky operates in Austria, Germany, Ireland, Italy and the U.K. It has 22.5 million customers, attracted by offerings such as English Premier League soccer and “Game of Thrones.”

Fox has been trying to buy the 61 per cent of Sky it doesn’t already own. The idea was to sell Sky to Disney as part of the broader deal. Last week, Comcast made a bid that values Sky at $34 billion, compared with $32.5 billion in Fox’s offer.

Disney said in a regulatory filing last week that Fox might not raise its bid to compete with Comcast’s offer, meaning Comcast is likely to end up with Sky and Disney the rest of Fox that’s up for sale. That includes other international properties, including the Star India satellite service. Some Fox businesses, including Fox News Channel and the Fox television network, will remain with media mogul Rupert Murdoch and his family.

Click on Deccan Chronicle Technology and Science for the latest news and reviews. Follow us on Facebook, Twitter.