Insiders, however, say the Murdoch family — the elder son, Lachlan, is Fox’s executive chairman, and his brother, James, is chief executive — will advocate for the best offer, regardless of the tax implications. The board, after all, has a duty to its shareholders to maximize their returns. Even a Disney stock deal would ultimately incur a tax hit once an investor cashed in those shares.
Investors with a significant ownership in Fox are already smiling.
“As a Fox shareholder, I’m the happiest guy in the world,” said Mario J. Gabelli, chief executive of the investment firm Gamco Investors. “I have a bidding war for one of my largest holdings. I have over $500 million in this, and I think it’s terrific.”
Let the games begin
If the Murdochs and the board determine Comcast has the superior offer, they will alert the Disney chief, Robert A. Iger, and his directors of their new preference, and the July 10 shareholder meeting will be void.
Disney then has five business days to respond. If Disney returns with a counter bid Fox likes, the ball is back in Comcast’s court.
But unlike Disney, Comcast wouldn’t have the luxury of time.
That’s because it has to negotiate within the confines of the merger agreement already laid out between Disney and Fox, which has built in some protections for Disney, specifically what is known as the right of last refusal. In other words, Disney will always have a chance to counter Comcast until it decides it has had enough.
There is still a potential gray area in the process. Before Fox officially notifies either party, it could try to stoke a higher bid by hinting of its intentions. This is where some gamesmanship could come into play.
But whether Disney or Comcast winds up with the assets, it is Mr. Murdoch who will be the real winner.