Just when Disney CEO Bob Iger thought he was out, a rumored deal with 21st Century Fox could pull him back in, at least past July 2019 when his current contract is scheduled to expire.
According to the Los Angeles Times, the Disney board wants to extend Iger’s contract beyond that date so he can oversee the integration of the Fox assets. Of course, Iger would likely only stay on if the Fox deal actually goes through.
Earlier this year, Disney extended Iger’s contract. According to a filing with the SEC, Iger is in line for a cash bonus of $5 million in addition to an award for fiscal 2019 as long as he stays on through the end of his renewed contract. After that, Disney intended to keep Iger on as a consultant for three years, for which Iger will receive a quarterly fee of $500,000 for each of the first eight quarters during the consulting period and $250,000 for each of the last four quarters.
Disney is currently said to be in deep negotiations with Fox for a good chunk of the business. Disney would not buy Fox’s broadcast network or the Fox News or Business channels. But Disney could acquire Fox’s film and television studios, international assets like Sky and Star, and Fox’s cable networks including FX and National Geographic, as well as Fox’s multiple regional sports networks.
Disney could also take hold of Fox’s 30% stake in Hulu, giving Disney a controlling interest in the streaming platform—Comcast/NBCUniversal owns 30% and Time Warner owns 10% of Hulu.
According to CNBC’s David Faber, Disney and Fox are still negotiating a price for the deal and looking for a way to mitigate tax leakages. But a deal could be announced as soon as next week.
Jefferies analyst John Janedis estimates the deal would cost Disney about $78 billion and that the company would almost entirely finance the deal with equity.
“We assume DIS would pay ~$78B (equivalent to ~$42/shr), incl. the assumption of $12B in net debt, for nearly $5.5B of EBITDA as well as FOXA's unconsolidated assets (SKY, Hulu). A key difference in the most recent reports are DIS's interest in the RSNs which we value at $18B (9.0x F19E EBITDA). Other assets in the deal include the intl cable nets valued at $18B (12.0x, incl. STAR), the domestic Ent nets at $12B (9.0x), and the studio at $11B (10.0x) - we remain surprised that FOXA would be willing to sell its TV production unit,” wrote Janedis in a research note.