Comcast-Disney Bidding For Fox Could Cost Murdoch Billions

Disney raised its bid for pieces of Twenty-First Century Fox to $71.3 billion, up from its original offer of $52.5 billion. This was in response to Comcast’s offer of $65 billion for the same Fox assets. Disney’s original bid was all stock. Its new bid is a mix of stock and cash, which raises Murdoch’s tax bill and cuts into his ultimate payday.

According to CNBC, the higher-priced Disney bid could yield about $2 billion less for Murdoch than Disney's original offer in December, despite the new offer being almost $20 billion higher. That's assuming Murdoch takes part of his payment in cash, as the new deal is structured.

Rupert Murdoch

Murdoch owns about 17 percent of Fox. Disney's original offer would have amounted to a tax-free payday of $8.84 billion, plus another $8.29 billion from the tax-free spin off of the new Fox. That would have given him a total of $17.13 billion.

Disney's new offer amounts to $12.12 billion for Murdoch, based on his 17 percent stake. But some of that is taxable, and if he takes the full half in cash, he ends up with $9.94 billion after tax. And then with the taxable spin off of the new Fox, around $5.3 billion, his proceeds from the overall deal would be $15.24 billion, nearly $2 billion less.

And then there's Comcast's offer, which also would fall short of Disney's original bid. It would net Murdoch $7.07 billion after taxes, plus another $5.3 billion from the spin off, for a total of $12.37 billion.

Regardless of what offer Murdoch takes, he’s still going to earn enough money to cover himself and his family for many, many lifetimes. So, part of this is just quibbling at the edges. But for a man who built an empire, and runs a conservative news network, he’s unlikely to enjoy watching billions go to the government.

Disney and Comcast, the parent of CNBC, have battled in private over the Fox assets for months. Murdoch was said to like Disney's original offer because of its tax-free treatment.