Fox shareholder urges Rupert Murdoch to give Comcast time to beat Disney's bid

Key Points
  • Twenty-First Century Fox shareholders will vote on Walt Disney's revised offer to buy some Fox assets on July 27, the companies said.
  • Disney shareholders will also vote on the deal on the same day.
Fox, Disney to hold shareholder vote on Disney bid on July 27

TCI Fund Management, a large Twenty-First Century Fox shareholder, has urged Fox executive chairman Rupert Murdoch to give Comcast a chance to top Walt Disney's $71 billion offer to buy most of Fox’s assets, according to a letter reviewed by Reuters.

Twenty-First Century Fox shareholders will vote on Disney's revised offer on July 27, the companies said. Disney shareholders will vote on the deal on the same day.

TCI Fund Management, run by Sir Christopher Hohn, owns 7.4 percent of Fox shares and said he disagreed with Fox’s view that Comcast’s bid would come with higher regulatory risk. TCI is “strongly motivated” to support whichever deal came at a higher price.

The letter highlights shareholder appetite for a continued bidding war between Disney and Comcast over Fox, whose stock traded 1.7 percent higher on Thursday at $49.62, more than $10 above Disney’s revised, roughly $38 per share offer.

Disney, Fox and TCI declined to comment. Comcast could not be reached immediately for comment.

Hohn’s $17.5 billion hedge fund has held stakes in German carmaker Porsche, Airbus, and aero engine maker Safran, and called for changes to boost their stock prices.

Hohn said a U.S. judge’s recent approval of AT&T's agreement to acquire Time Warner is “unequivocally positive” for similar deals, such as Comcast’s bid for Fox.

He also said the U.S. Department of Justice settlement with Disney earlier this week, which cleared the way for that company’s planned acquisition of Fox, further reduced the regulatory risk for a potential Comcast deal.

Hohn said the timetable for a Comcast deal would be roughly similar to a one with Disney, given the need for either transaction to obtain regulatory approvals internationally.

Disney agreed to buy Fox for $71 billion in stock on June 20, trumping a $65 billion cash bid from Comcast. Disney had originally agreed to buy Fox for around $52 billion late last year.

Fox delayed its planned shareholder meeting, scheduled for next month, to give Comcast time to come back with a higher bid.

The Fox assets in play include a cable group that includes FX Networks, National Geographic and 300-plus international channels plus Fox’s stake in Hulu.

Disney owns ABC, ESPN, Pixar, Marvel Studios and “Star Wars” producer Lucasfilm, plus an array of theme parks.

A deal for Fox would allow Comcast to better adapt to new trends in the pay-TV industry, as consumers abandon traditional cable bundles in favor of web-based offerings such as Netflix.

The Financial Times first reported on the letter.

(Disclosure: Comcast is parent of NBCUniversal and CNBC. Comcast also has an investment in Hulu.)