It has reportedly rounded up $60 billion in cash from various investment banks in order to make the deal happen.

But wait a minute, didn’t Fox agree to merge with entertainment company Disney?

Let’s take a trip back…

Back in December, Disney announced it would acquire numerous divisions of Fox, including its film and television studios, cable entertainment networks and international TV businesses, in a deal worth $52 billion.

So why is Comcast making an end run around Disney to try to capture Fox?

It’s what’s known in the investing world as a hostile bid, or hostile takeover. That’s when one company attempts to buy a company, against the wishes of the executives and board managing that company.

Why is Comcast doing this?

Comcast’s strategy is to offer the Fox’s shareholders a deal that’s more lucrative than the one that was initially proposed. In this case, Comcast is offering an additional $8 billion, which is known as a premium over the original purchase price.

A premium is like a bonus, it’s an amount that’s more than the original price, and it acts as a sweetener for the deal, providing shareholders with more money once the deal goes through.

Weren’t hostile takeovers a big thing in the 1980s?

You remember correctly! In the 1980s, it became popular for certain investors or companies to buy up as many shares of the company it wished to acquire, until it had a majority ownership of the target company.

This tactic is also known as corporate raiding.

The film Wall Street, which features Michael Douglas as the fictional corporate raider Gordon Gekko, who famously said, “greed is good,” put its cultural stamp on the era.

Real life examples of corporate raiders in the 1980s:

• Investor Carl Icahn is known today as a shareholder activist, but in the 1980s he was also a corporate raider who famously engineered the takeover of the now defunct Trans World Airlines, or TWA.
• Similarly, T. Boon Pickens struck fear in the heart of corporate boardrooms, in his bid to take over the petroleum giant Gulf Oil.
• Ronald Perelman engineered the takeover of makeup company Revlon for $1.8 billion in 1986.

How can companies avoid a hostile takeover?

As a way to protect themselves, some companies adopted what is known as a poison pill strategy. That’s when a company attempts to ward off a hostile takeover by giving existing shareholders the option to buy outstanding shares at a steep discount when any one entity buys more than a set percentage of the company’s stock, for example, 15 to 20 percent of outstanding stock.

In contrast, another poison pill arrangement allows shareholders to purchase the shares of the corporate raider’s stock at a deep discount–which makes the deal unattractive to the company looking to acquire the target company, because it can wind up making the acquiring company’s stock less valuable, via a process known as dilution.

So what’s happening with Comcast and Fox now?

The Comcast bid isn’t a done deal yet. In fact, Comcast had tried unsuccessfully to purchase Fox assets in November, according to reports. Shareholders must ultimately agree to the new offer.

Regulators examining the proposed Disney and Fox merger for monopoly implications may also rule against the deal, which would similarly make the Comcast takeover unlikely, on the same grounds.

The post Why So Hostile? Behind Comcast’s Bid for Fox appeared first on Stash Learn.

The Federal Communications Commission (FCC) voted on Thursday to overturn a critical set of regulations known as net neutrality.

The debate over net neutrality–regulations that say all content that flows over broadband networks must be treated fairly and equally–has been one of the most complicated discussions happening in the public sphere and in the business world in recent months.

What happened?

The FCC is the government agency that regulates radio, telephone, TV and cable communications.

The commission’s five-person board voted 3-to-2 to overturn the regulations, which were put in place in 2015 under the Obama Administration. The commissioners voted along party lines, with a Republican majority prevailing.

“We are helping consumers and promoting competition,” Ajit Pai, the FCC’s chairman appointed by President Trump, said prior to the vote, according to the New York Times. “Broadband providers will have more incentive to build networks, especially to underserved areas.”

Those in favor of the federal guidelines say they keep down costs for consumer broadband access, while ensuring a level playing field for content providers, which range from tiny tech startups to dynamos such as Netflix.

Those opposed to the rules generally say they have throttled innovation and hamper the ability of internet service providers to invest in and grow their networks.

Next steps

Numerous consumer groups, tech companies, and Internet activists have threatened to sue the FCC to maintain existing net neutrality regulations. There has also been a push among some members of Congress to introduce legislation that would make net neutrality the official law of the land.

Nevertheless, broadband providers will have immediate discretion to begin offering new packages with new pricing schemes that could potentially favor some content over others, according to the Wall Street Journal.

Bitter divide

In a sign of how contentious the vote was, Mignon Clyborn, one of the FCC’s Democratic commissioners, had this to say, in a statement following the decision:

“I dissent from this fiercely-spun, legally-lightweight, consumer-harming, corporate-enabling Destroying Internet Freedom Order. I dissent, because I am among the millions who is outraged. Outraged, because the FCC pulls its own teeth, abdicating responsibility to protect the nation’s broadband consumers.”

Net neutrality explained

Net neutrality is a phrase coined by Columbia Law School professor Timothy Wu in 2003.

It’s the principle that says all data that flows over the internet–composed of computer networks that operate invisibly in the background every time you look at Facebook from your smartphone or watch Netflix shows from your desktop computer, for example–must be treated the same way.

The networks are operated by broadband companies often referred to as internet service providers, or ISPs, and they include companies such as AT&T, Comcast, Verizon, and Time Warner.

Net neutrality regulations said these ISPs couldn’t play favorites, for example by prioritizing their own programming by delivering it more quickly to consumers. They also couldn’t block or slow down downloads of legitimate content, even if it competed with a similar product they may have or own.

Without net neutrality, some experts have postulated the Internet could be carved into “fast lanes” and “slow lanes”, enabling network providers to simply prioritize their own programming over content from competing companies. They’d do that by potentially delivering it at faster speeds, or demanding payment for faster access to networks.

The post The FCC Just Voted to End Net Neutrality: Now What? appeared first on Stash Learn.