With a $71 billion deal for nearly all of its assets approved by shareholders last month, a bidding war over UK broadcaster Sky Plc with Comcast (CMCSA) ongoing, and consolidation into "New Fox" expected, there will be a lot to digest in Twenty-First Century Fox's (FOXA) earnings report after the market close on Wednesday.
The stock has been hot in the past year, nearly doubling from levels it held as recently as November 2017, largely on the back of Walt Disney Co.'s (DIS) acquisition bid.
Fortunately, Disney, the company that looks poised to assume a majority of Fox's current assets, provided a solid preview for Fox's release in its own earnings yesterday, breaking down what will be left of Fox following the completion of its acquisition in its SEC filings.
Essentially, Fox will maintain a portfolio of its news, sports and broadcast businesses.
This will include its prized ratings champion the Fox News Channel as well as the Fox Business Network, Fox Broadcasting Co., Fox Sports, Fox Television Stations Group, FS1, FS2, Fox Deportes, Big Ten Network and certain other assets.
Management's outlook on managing this smaller business, pending the completion of the acquisition, will be important moving forward for investors and analysts to assess the value of the "New Fox".
Tuna Amobi, an analyst for CFRA Research and diligent watcher of media industry consolidation, issued a hold rating on Fox based on Disney's presumed final bid of $38 a share.
It is worth noting that the proposed sale price is well below the current market value of the stock, which stood at $45.25 for class A shares as of mid-day.
Also in play is Fox's bid for Sky Plc, a U.K.-based paid TV provider.
Earlier this month, Comcast announced it would no longer pursue purchasing Fox and focus on an acquisition of Sky as well, competing with Fox rather than seeking to purchase it.
Just last night Fox offered £14/share for Sky, below the £14.75/share that Comcast has offered. The tactic behind this move were spelled out in Fox's August 7 8-K filing, which state the company is pursuing a takeover of Sky rather than an acquisition.
"The Company announced that it intends to implement the Sky Acquisition by way of a takeover offer within the meaning of Part 28 of the Companies Act 2006 rather than by means of a scheme of arrangement in accordance with Part 26 of the Act, which was the proposed structure of the Sky Acquisition prior to the announcement," it explains in its most lawyer-like parlance.
Amobi noted that he believes concessions may need to be in place for the deal to be finalized.
"Mindful of potential valuation sticking points, we see some likelihood of a quid pro quo on Fox's 36% stake in SKY (part of Disney's bid) versus Comcast's 30% stake in Hulu (in which Disney and Twenty-First Century Fox each also own a 30% stake)," he proposed.
The concession would have implications for both Comcast and Disney, after Disney CEO Bob Iger firmly stated his expectation to assume 60% control of Hulu in order to further its DTC ambitions.
With so much at stake in this company in flux, all eyes and ears will be turning to the earnings call today at 4:30 p.m.