Business Corpus: Comcast Readies Fox Bid; Investors Mull Debt, Dividend, Stock Buyback ImpactComcast fell in after-hours trading as investors mulled fresh reports that the cable TV firm will pile on debt to finance an all-cash bid for 21st Century Fox, aiming to break-up its deal with Walt Disney. The post Comcast Readies Fox Bid; Investors Mull Debt, Dividend, Stock Buyback Impact appeared first on Investor's Business Daily.

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Shares in Comcast (CMCSA) fell in after-hours trading as investors mulled fresh reports that the cable TV firm will pile on debt to finance an all-cash bid for 21st Century Fox (FOXA), aiming to break-up its deal with Walt Disney (DIS).

Comcast fell 1.5% to 31.90 in late trading on the stock market today. The cable and broadband giant is in talks with banks to obtain some $60 billion in bridge financing needed to bid for Rupert Murdoch's Fox, said reports. Comcast has already bid $31 billion for satellite TV broadcaster Sky, in which Fox holds a 39% stake.

Fox stock rose 4%. Walt Disney, which reports quarterly earnings on Tuesday, fell 0.5%.

The cable TV firm on its first-quarter earnings call said it would not finance a major acquisition by issuing stock. But it did not address how much debt it was willing to take on to challenge Disney.

Fox agreed in November agreed to accept Walt Disney's $52.4 billion stock offer.

Comcast stock has struggled since the company's interest in Sky surfaced in February. The cable TV firm was down 19% in 2018 as of Monday's market close.

Will Comcast Suspend Stock Buybacks?

Walter Piecyk, analyst at BTIG Research, said in an April 27 blog that Comcast would likely suspend its stock buyback plan but keep dividends in place if it makes an all-cash bid for Fox.

"An all-cash transaction at a 25% premium to Disney's bid would mean that Comcast would be assuming $26 billion of debt and raising an additional $82 billion of debt, bringing total net debt to nearly $170 billion pro forma," Piecyk wrote. "That sounds like a nearly impossible level of debt to sustain. However, consider first that AT&T (T) (with) Time Warner (TWX) will have $135 billion of net debt if the deal closes and Verizon Communications (VZ) currently has $117 billion of net debt."

Comcast, which owns NBCUniversal, produces enough free cash flow to temporarily increase leverage, says Piecyk.

The nation's biggest cable TV firm is waiting for a judge to rule next month on the Justice Department's challenge to AT&T's proposed $85 billion acquisition of media conglomerate Time Warner before it submits an offer to Fox.

Comcast was co-founded by Ralph Roberts in the 1960s. A dual-class stock structure gives the Roberts family control of about a third of Comcast's voting power.

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