Mario Gabelli, Gamco Investors chairman and CEO, weighs in on the media landscape as Disney and Comcast wage a bidding war over Fox assets.
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Mario Gabelli On Disney And Comcast's Battle For Fox Assets
How high do you think the bid for Fox goes. Well my own sense is you know Comcast Brian wants to have a opportunity to participate. He's a hybrid right now and sky it's obviously Fox will have to do something if they want to own sky to buy the balance within the framework of the deal on the table. He probably has to bump into you know three or four dollars a share. Again let me highlight an echo of the comments that we might have made the past and that is that SpinCo you're getting 38 dollars combination of 50 percent cash 50 percent is the paper would a collar which means that depending on where the price is whether it's the price volume weighted average price or whether it's how they determine that. If Disney Was selling you know at the let's assume 106 dollars you're going to get 38 divided by a 106. As that is your prorated share of the Disney stock which is like point 3 5 without getting too technical. So I would argue that Comcast now can either come back with a part of stock or part cash but it's got to be up to forty one dollars. But my clients own Fox will have ten dollars in public markets with about 17 billion in private market value of what we call the new Fox. So you add that ten dollars that is 38. So that's why the stock is at forty seven and change because you know in hand you have 48 dollars. Then the question depends on the timing.
How long will Comcast be able to need to get their proposal if they have higher economic value through the regulatory agency and that is a time value of money in the second part is how far along is Disney in getting that process started. So those are the elements. So Maria it's Michelle here. Your firm's got 5 million of Fox and 5 million of Fox say ultimately conceptually what would you not prefer or would you want. A lot of cash from Comcast. Or would you like to hold that Disney stock down the road. I will take a coin out and give to my taxable clients what is taxed at the lowest possible rate. Pay less tax pay later which is one of the great lines I learned from John Malone about 40 years ago. So my clients want to pay less pay later. And the second part is those are tax free are going to say hey listen I love this. I think your earnings estimate of Disney of ten dollars a share out two or three years makes a lot of sense and Disney's going to have a strong tailwind and we like Comcast Comcast at thirty three dollars is a bargain. So you know we will make the determination but at the moment we are doing what we would always do and a great opera and that is just applaud the participants and say carry on. Yeah. Mario it's Scott it's nice to talk to God. How are you doing. What are you working overtime. Yeah that's OK. Enjoy it. Enjoy.