Comcast and NBC buildings in New York.

The biggest hurdle to the completion of Disney’s purchase of a vast swathe of Fox assets may not be regulators, but rather Comcast. Back in November, soon after reports of Disney’s interest in Fox first emerged, it came out that Comcast was targeting those properties too, and they actually offered a higher bid. Fox turned down Comcast to take Disney’s offer, but Comcast made it known in February and May that they would try again if the AT&T – Time Warner merger was approved (lowering regulatory concerns), and a judge’s decision to approve that merger sans conditions Tuesday led to Comcast formalizing their offer Wednesday.

So, just what’s in that offer? Well, Comcast is offering $65 billion in an all-cash bid, a 19 percent premium over Disney’s all-stock offer that’s estimated at around $52.4 billion. They’re also offering to pay Fox’s $1.525 billion breakup fee to Disney and another $2.5 billion in a reverse termination fee if this doesn’t go through.

Here are some key elements of Comcast’s offer letter to the Fox-controlling Murdoch family, via Recode’s Peter Kafka:

We have long admired what the Murdoch family has built at Twenty-First Century Fox. After our meetings last year, we came away convinced that the 21CF businesses to be sold are highly complementary to ours, and that our company would be the right strategic home for them.

So, we were disappointed when 21CF decided to enter into a transaction with The Walt Disney Company, even though we had offered a meaningfully higher price. We have reviewed the publicly available terms of the proposed Disney transaction, as well as the joint proxy statement/prospectus filed with the SEC describing the reasons for the 21CF Board of Directors’ decision. In light of yesterday’s decision in the AT&T/Time Warner case, the limited time prior to your shareholders’ meeting, and our strong continued interest, we are pleased to present a new, all-cash proposal that fully addresses the Board’s stated concerns with our prior proposal.

Our new proposal offers 21CF shareholders $35.00 per share in cash and 100% of the shares of New Fox after giving effect to its proposed spinoff, providing superior and more certain value as compared to Disney’s all-stock offer. Our proposal represents a premium of approximately 19% to the value of Disney’s offer as of noon today. We are highly confident in our ability to finance the transaction, and our offer includes no financing-related conditions.

…We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction. …Our transaction should be reviewable by the DOJ in the same cycle as Disney’s transaction. We similarly expect that our transaction should be reviewable by international regulators in as timely a manner as the Disney transaction, and should be as or more likely to receive international approvals, given our relatively small presence outside the U.S.

That last part is interesting, and it’s further notable that Comcast is trying to play up the international elements of this and downplay just how much market dominance they’d gain over regional sports networks if this did go through. Here’s an additional line Kafka includes from a Comcast representative:

Almost everything we want to buy from Murdoch — Sky, Star India, etc — isn’t in the U.S. , anyway; by our count 70 percent of the revenue from those assets is generated outside America. So U.S. antitrust regulators won’t have much to look at it.

Yes, U.S. antitrust regulators don’t have a ton of control there (foreign ones sure do, though, and it’s notable that Fox’s attempt to buy the rest of Sky has faced major hurdles; Comcast has also tried an end run of buying Sky, which is still up in the air), but they do have control over the U.S. elements of this. And the regional sports network part is particularly interesting to consider there. Those networks appear to be a key part of this deal, especially given their profitability.

Fox is the largest controller of RSNs in the U.S. with 22, but Comcast is second with eight. If those two came under the same roof, that’s 30 combined RSNs, while Spectrum has five and AT&T has four. There are some independent ones too, but Fox and Comcast are by far the largest players here, and combining their RSNs would create a whole lot of market dominance, especially considering that Comcast is also a major cable provider. And there might be some regulatory concerns with that, which is part of why Comcast didn’t even make this offer until AT&T-Time Warner was approved. That decision suggests there’s at least a chance that this could work, but there still are perhaps higher hurdles to clear in a Comcast-Fox deal than in AT&T-Time Warner.

And that’s part of why it’s not a foregone conclusion that Fox will accept this Comcast bid instead of the one from Disney, even with the substantial premium offered. Despite Comcast’s claims, there are reasons to think that a Disney – Fox deal will be smoother than a Comcast – Fox deal (which is part of why Fox picked Disney’s initial bid in the first place), especially when it comes to American regulators and RSNs.

Disney is a content provider, not a cable provider. And sure, there still could be concerns about the extra leverage they’d gain from controlling a ton of RSNs; when it comes to carriage negotiations, it’s nice to have a bunch of networks that you can potentially pair, to say nothing about how much of the TV sports landscape would be under Disney’s roof after this deal. But Disney doesn’t currently own RSNs, so there would still be two major players in the RSN landscape after their deal, plus the smaller ones. The Comcast move would reduce that number to one, and would also bring up concerns about if Comcast could use its leverage as both a cable provider and a RSN controller against the competition.

It’s also notable that while Comcast’s offer represents a significant premium, all-cash is not necessarily preferable to all-stock, especially when it comes to tax implications. And it’s possible that we haven’t seen the last from Disney, either; this move’s been seen as key to their future plans, and maybe they’ll be willing to sweeten their own offer now Comcast has chimed in. (It’s possible that even not being selected here could work out for Comcast if they’re able to make competitor Disney pay more.)

Both of these companies really, really want what Fox is selling here, even apparently to the point of being willing to buy just the non-RSN assets if regulators demand that:

It does seem pretty likely that the RSNs are going to wind up in the hands of either Disney or Comcast, though. And whichever way that goes, that’s going to have a massive impact on the cable sports landscape. But now there’s a fair bit of uncertainty about which one of those companies will get them. And it’s going to make for fascinating watching.

[Recode]

About Andrew Bucholtz

Andrew Bucholtz is a staff writer for Awful Announcing.