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Comcast, Disney fall amid fight for Fox, CBS-National Amusements battle rages

Several big media companies underperformed the broader S&P 500 Index during the week ended May 25 amid M&A and corporate governance developments.

Among those taking a tumble were Comcast Corp. and Walt Disney Co., both of which are angling to acquire assets from 21st Century Fox Inc. Comcast early in the week confirmed its interest in submitting an all-cash offer that would challenge the $52.4 billion all-stock offer Disney made in December 2017, despite indications from Fox executives that they remain committed to the Disney deal. Shares of Fox rose on the news, up 4% for the week as of midday.

Comcast's shares were trading at $31.91 at 12 p.m. ET May 25, down 2.5% from their May 18 close. Disney's shares were at $102.73 as of midday May 25, down about 1% from their May 18 closing price. The broader S&P 500 Index gained slightly, up 0.27% for the week as of midday May 25.

SNL Image

SNL Image

Meanwhile, CBS Corp.'s legal battle with controlling shareholder National Amusements Inc. continued, with CBS indicating it would challenge recent amendments to its bylaws by National Amusements, which owns a nearly 80% controlling stake in the company. CBS' independent directors recently sought to dilute National Amusement's voting power with a special dividend, though it remains unclear whether the maneuver will hold up in court. National Amusements on May 16 amended the company's bylaws to require that certain board actions, including dividends and bylaw changes, be approved by a supermajority of the CBS board of directors.

Central to the dispute between CBS and its majority shareholder is CBS' claims that National Amusements' President Shari Redstone interfered with CBS independent directors' ability to evaluate a potential merger with Viacom Inc., a charge that Redstone has denied.

CBS' shares were trading at $51.25 midday May 25, down nearly 1% from their May 18 close. Viacom's stock was trading at $27.50 May 25, up about 1% from its May 18 closing price.

Facebook Inc.'s shares rose slightly during a week in which Chairman and CEO Mark Zuckerberg appeared before the European Parliament and at VivaTech, a technology conference in Paris. At both events, the executive apologized for Facebook's past missteps, including failing to more proactively monitor for the potential misuse of its platform data by third parties, including the now-defunct data analytics firm Cambridge Analytica LLC. Zuckerberg also said he expects the company will be fully compliant with the General Data Protection Regulation, or GDPR, the EU's new privacy controls, which took effect May 25.

Facebook's shares were trading at $185.08 at noon ET May 25, up 1.3% from their May 18 close.

Among the media sector's price leaders during the week was World Wrestling Entertainment Inc., which saw its shares soar amid reports that FOX is close to finalizing a nearly $1 billion five-year deal to air the company's "SmackDown Live" series. The deal comes after NBCUniversal Media LLC declined to match the $1 billion bid for the rights of "SmackDown," which currently airs on USA (US). WWE's shares were trading at $58.33 midday May 25, up 13% from their May 18 closing price.

In communications, DISH Network Corp.'s stock fell during the week. Speaking at an industry conference in Charlotte, N.C., DISH Chairman Charlie Ergen said the second phase of the company's wireless network construction plan, including next-generation 5G technology, will cost $10 billion, Bloomberg News reported May 23. The first phase involving a narrowband network designed to support the internet of things, which is expected to cost $1 billion, is underway, Ergen said.

DISH shares were trading at $30.77 as of midday May 25, down 4.9% from their May 18 close.

Frontier Communications Corp.'s shares dropped even more sharply during the week. The company and its bondholders are in talks after its asset auction in Florida earlier this month did not generate an acceptable price, Bloomberg News reported May 22. Frontier was expected to use the proceeds of the sale to pay down some of its $17.8 billion of debt but has instead resumed talks with bondholders to discuss how best to tackle its looming debt problem, according to Bloomberg. Frontier's stock was trading at $7.37 around noon ET May 25, down about 20% from its May 18 close.