The Walt Disney Co. Inc. may be trying to modify the terms of its deal to purchase Fox Family Worldwide Inc.
Disney reached an agreement to purchase Fox Family for $5.3 billion in stock and assumed debt in July. It reportedly beat out several other suitors, including Viacom Inc., USA Networks Inc., AOL Time Warner Inc. and General Electric Co.'s NBC.
Disney had planned to use Fox Family Channel to repurpose some of its ABC broadcast network and cable network programming, and said it would rename the network ABC Family once the deal was closed sometime in November.
Earlier this month, Disney president Robert Iger dropped a hint.
"We will monitor that very carefully," Iger said of the Fox Family deal at the Goldman Sachs & Co. Communacopia conference on Oct. 3. "If all the terms and conditions of the deal as negotiated are met, we will proceed to close it."
At the time, Disney senior vice president of corporate communications John Dreyer said those conditions were mainly international regulatory approvals.
But last week, the Financial Times
quoted Disney chairman Michael Eisner as saying that in light of the Sept. 11 terrorist attacks, the company would revisit the Fox Family deal.
"We're looking at what has happened since then and how that affects the deal," Eisner told the newspaper. "We are a little concerned."
Disney vice president of corporate communications Christine Castro said the company would have no further comment on the agreement.
Andrew Butcher, vice president of corporate affairs and communications for News Corp., one of Fox Family's co-owners, also declined to comment.
Disney's stock has fallen about 34 percent this year and its debt rating was cut earlier this month by both Moody's Investment Service and Standard & Poor's, in part because of the Fox Family acquisition, which carries about $2.3 billion in debt.
But just how Disney would be able to renegotiate the deal is unclear. Some published reports have claimed that Disney could invoke a "material adverse change clause" in its contract — boilerplate language for most big deals — as a result of the terrorist attacks. Such clauses usually allow deal participants to back out of a deal without penalty in the event of a major catastrophe.
But sources close to News Corp. said that was unlikely.
"That would be a struggle," said one source close to News Corp. "We have a solid contract."
