Shares in Walt Disney Co. ended the month of May on a difficult note as the company's brewing bidding war over 21st Century Fox Inc. continued to escalate and as a social media controversy caused the company's ABC (US) network to cancel its sitcom "Roseanne."
With Comcast Corp. confirming it is in the advanced stages of preparing an all-cash counteroffer for Fox, CNBC reported Disney is prepared to offer Fox significant cash, if needed, in an effort to ward off any competing bids from the cable giant. Fox previously agreed to sell its entertainment assets to Disney for approximately $52.4 billion in stock. According to the report, Comcast will only submit a bid if a federal judge approves AT&T Inc.'s proposed merger deal with Time Warner Inc., a decision that is expected by June 12.
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In the meantime, Fox on May 30 scheduled a July meeting for its stockholders to vote on the company's proposed sale to Disney. Fox, whose board has recommended its shareholders vote in favor of the Disney deal, said its July 10 shareholder meeting could be delayed or adjourned as needed for any updates that occur before the meeting and require additional review.
Fox activist investor Chris Hohn recently said he will back Comcast's bid over the current offer from Disney. But analysts and legal experts warn that deal could face regulatory hurdles, with American Cable Association President and CEO Matthew Polka saying Comcast's potential offer for Fox's assets "is not good for consumers and competition."
Channing Dungey, president of ABC Entertainment, took to the social media platform to note the show's cancellation: "Roseanne's Twitter statement is abhorrent, repugnant and inconsistent with our values and we have decided to cancel her show." Disney Chairman and CEO Bob Iger backed the decision, saying in a tweet, "There was only one thing to do here, and that was the right thing."In other company news, following a controversial tweet by the show's star, ABC canceled its highly rated sitcom "Roseanne." The network's axing of the revived comedy came after the show's biggest star, Roseanne Barr, called former President Barack Obama adviser Valerie Jarrett an offspring of the "Muslim Brotherhood & Planet of the Apes" on Twitter Inc.
Disney's shares were trading at $99.52 midday June 1, down 2.6% from their May 25 close.
Comcast's shares were trading at $31.31 at 12 p.m. ET June 1, down 1.4% from their May 25 close, and Fox's stock was trading at $38.55, down 1.2% for the week.
Turning to telecommunications, Windstream Holdings Inc. dropped sharply during the week. The fall came after Windstream completed its 1-for-5 reverse stock split May 25, in which the company divided its current shares by five.
The authorized shares of Windstream's common stock were reduced to 75,000,000 shares from 375,000,000 shares, while the number of authorized shares of preferred stock decreased to 6,666,667 shares from 33,333,333 shares. In an April proxy statement, the company said, "The main reasons for proposing the reverse stock split are to increase the trading price for Windstream common stock and to attract a broader investor base."
Windstream's shares were trading at $5.57 at 12 p.m. ET June 1, down 9.4% from their May 25 close.
"Roku benefits from strong secular tailwinds as consumer behavior shifts from viewing TV over traditional distribution (e.g. free-to-air broadcast, cable/satellite/telco) to 'over-the-top' (OTT) internet video consumption, indicating potential upside to account growth and the time spent per account," Swinburne wrote. Roku Inc.'s stock also tumbled during the week despite an analyst upgrade. Morgan Stanley analyst Benjamin Swinburne in a May 29 note raised his rating to "equal-weight" from "underweight" for Roku shares, citing the company's strong performance in expanding its streaming platform. The stock resumed trading May 29 on the Nasdaq Global Select Market under the symbol WIN.
Swinburne added that he believes Roku can grow its active account user base by 20% annually over the next five years to reach more than 45 million users.
Roku's shares were trading at $36.45 midday June 1, down 5.4% from their May 25 close.


