CMCSA Comcast Corporation

By Dana Mattioli and Amol Sharma 

Walt Disney Co. has re-engaged in discussions with 21st Century Fox to purchase some of the media giant's assets, and Comcast Corp. remains in the mix, with deal talks gaining momentum, according to people familiar with the situation.

The talks center on the Twentieth Century Fox movie and TV studio, international assets such as Fox's 39% holding in U.K. satellite TV provider Sky PLC and India's Star TV, along with some U.S. cable networks. Fox News, the Fox broadcast network and sports network FS1 aren't expected to be sold in any transaction, the people said.

Rupert Murdoch and his family, who hold 39% of 21st Century Fox's voting shares, expect to make a decision by year's end on whether to pursue a transaction, the people said.

Disney first reached out to 21st Century Fox about a possible deal several weeks ago, but the talks cooled after the two sides couldn't agree on price, among other issues, people familiar with the matter have said.

Once news of those initial talks surfaced, other potential acquirers began emerging. Comcast, Sony Corp.'s entertainment unit, and Verizon Communications Inc., are among firms that have expressed various levels of interest, the people familiar with the situation say. The extent of discussions with Sony and Verizon is unclear. A top Verizon executive last week played down the need for the company to do a big content acquisition.

Disney and Comcast are in active talks with 21st Century Fox. It is possible the talks could fall through and a deal won't be reached.

21st Century Fox and Wall Street Journal-parent News Corp share common ownership.

The assets in play would give a buyer exposure to growth in international markets as the U.S. pay-TV industry reaches maturity.

With the Twentieth Century Fox studio, they would also get a premier Hollywood content factory and strengthen their position as media consumption shifts to digital platforms.

Also on the table in some of the discussions is Fox's 30% stake in streaming service Hulu. Disney and Comcast each also own 30% of the company, so they could consolidate control by buying out Fox's stake. Fox's regional sports networks could also be sold off, the people familiar with the situation say.

The Fox deal talks are happening as another big media deal, AT&T Inc.'s proposed takeover of Time Warner Inc., is headed for court. The Justice Department has sued to block the transaction, arguing it will reduce competition and harm consumers. Some industry observers thought that any major media deal-making would be on hold as companies wait to see the result of that litigation.

A sale would mark a significant turn for 21st Century Fox, which has long been viewed as a potential buyer in the media industry, not a seller. Media companies across the board are considering new business models and strategic options as they confront a rapidly changing landscape, with consumers cutting the cable TV cord, big programming distributors flexing their muscles, and advertising revenue growth uncertain.

The remaining elements of Mr. Murdoch's entertainment empire would be much smaller if an asset sale is completed.

But the entity would likely include some engines of growth. In the September quarter, results at 21st Century Fox were driven by the cable network group including Fox News and sports network FS1, which posted a 9% increase in operating income before depreciation and amortization. Revenue from monthly pay TV subscription fees continues to grow, in part because of higher prices.

Meanwhile, operating profit at Twentieth Century Fox fell 18% from a year earlier, as last year's results were boosted by licensing deals.

Overall, Fox's profit in the September period rose 4% to $855 million. Revenue rose 7.6% to $7 billion.

Write to Dana Mattioli at dana.mattioli@wsj.com and Amol Sharma at amol.sharma@wsj.com

(END) Dow Jones Newswires

December 02, 2017 14:08 ET (19:08 GMT)

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