Deals and IPOs

Comcast-Fox deal could earn Wall Street nearly half a billion dollars in fees

Key Points
  • M&A bankers including Goldman Sachs stand to share $180 million in advisory fees, according to Freeman Consulting.
  • The bigger haul comes from financing Comcast's $65 billion all-cash offer, which could result in $300 million in fees.
  • Investment bankers were already on track for a record year, with $1.13 trillion in deals through May.
Disney needs to match Comcast and up bid for Fox, says analyst

When it comes to a media bidding war, it's good to be the middlemen.

Wall Street banks including Goldman Sachs, Bank of America and Wells Fargo stand to split as much as $480 million in fees if Comcast's $65 billion offer for Twenty-First Century Fox's film and cable assets is accepted, according to estimates from Jeff Nassof, a director at Freeman Consulting Services.

Comcast, the parent of CNBC, made its all-cash offer Wednesday, setting up a showdown with rival Disney, which earlier agreed to pay $52.4 billion in stock for the Fox assets. Disney may increase its bid and include a cash component to try to win the deal, CNBC has reported.

A federal judge's approval this week of another megadeal, the merger between AT&T and Time Warner, has unleashed activity in the media sector as content and delivery companies look to gain scale amid threats from newer entrants including Netflix and Amazon. The Fox assets in play include movie studios, cable networks, stakes in a European pay-TV provider and streaming service Hulu, and regional U.S. sports networks.

If the Comcast-Fox deal happens, merger and acquisition bankers including Goldman, Deutsche Bank and Centerview Partners will split as much as $180 million in advisory fees, according to Nassof.

A man stands beside the 21st Century Fox sign outside their offices in New York.
Scott Mlyn | CNBC

The bigger haul will be from the financing of the $65 billion offer by Comcast, he said. Short term financing in the form of a bridge loan could yield $100 million in fees, the lion's share going to Bank of America and Wells Fargo. Then when that loan gets replaced with a bond offering, that could yield another $200 million in fees for a group of banks, he said.

Since about 90 percent of an M&A banker's fees comes after a deal is closed, advisors on either the Comcast or Disney side are set up for some disappointment. "It's a pretty big blow" to the bankers of whichever side loses the deal, Nassof said.

The sell-side advisors to Fox will be getting paid in either scenario.

Investment bankers were already on track to have a banner year. North American companies announced a record $1.13 trillion in deals through May, 67 percent higher than the same time last year, according to J.P. Morgan Chase. That has been driven by megadeals — the number of deals at least $10 billion surged 129 percent. Technology and oil and gas deals drove the activity, the bank said.