21st Century Fox is down to one suitor, The Walt Disney Company, to purchase the majority of its assets as the Murdoch family looks to offload much of their media ownership. The expected $60 Billion deal in cash and stock could be announced as soon as today.
12/14 7AM Update: The deal was officially announced this morning. Total value of Disney’s purchase is expected to be about $52.4 Billion dollars. This is a developing story.
Any deal this size will have to pass regulatory review before it is approved. This sometimes takes upwards of a year with horizontal mergers like this. While the regulatory environment is thought to be favorable for this deal, it’s not a done deal by any stretch of the imagination.
One of the side effects of a merger like this is consolidation of overlapping departments. This means layoffs loom for hundreds of Fox employees. On the heels of Disney’s own recent internal layoffs there is not likely to be much room to move into other open positions.
Disney would not make a deal like this without the synergy created by eliminating some duplicate management structure. With companies as large as Disney and Fox there will be quite a lot of that. Our sympathies to the Fox employees who are living with a lot of uncertainty right now.
Disney is not getting all of the Fox assets in the deal. In addition to keeping the Fox News Channel, Fox’s local owned and operated TV stations, and its Fox Sports Cable channels, Fox is expected to retain its Century City Studio Lot. While production facilities are still in high demand in southern California, the value of turning some of that property into commercial real estate might too too high to pass up for Fox. It might also be attractive to a company like Amazon or Netflix that is making big moves into film and TV production.
This deal would leave just three big studios in Hollywood (Disney, Universal, and Warner Bros). It’s expected that Disney would probably not produce as many films under the Fox brand as the company currently does. That will open up some future movie theater slots for smaller studios to get a piece of the pie. As to what happens with the more adult fare produced by Fox, it’s thought that Disney would keep a Fox label active so those films aren’t associated with the Disney brand.
After it spun off Mirimax, Disney was left with no specialty division that produces Oscar contenting pictures, but Fox has its Fox Searchlight division. Movies like “Slumbdog Millionair,” “12 Years A Slave,” and this year’s “The Shape of Water” are notable examples. Would Disney be willing to return to the award show film circuit again after the Merger or would it look to sell off Fox Searchlight?
Theme park fans in Orlando keeping a close eye on one scenario in which Universal would be interested in acquiring from Disney some of the Fox properties that they have in their theme parks? A deal to swap Marvel characters for The Simpsons, perhaps? The purchase will already give Disney access to all rights for Avatar, “Planet of the Apes,” Alien and Predator films, and “The X-Files.” That’s a pretty impressive theme park all on its own right there if Disney wanted to build it somewhere.
Don’t overlook that the purchase of Fox will give Disney all the rights to the original Star Wars films as well.
Disney is also in the market for a replacement for current Board chair and CEO Bob Iger. It’s expected that Iger will extend his reign to help smooth over any transition. But there are certainly Fox executives who might show promise as a replacement for Iger.
The end result of this deal is to give Disney the scale it needs to compete in a rapidly changing entertainment industry. Adding the Fox library to Disney’s streaming service will make it the top player almost instantly when it debuts. The same with Fox Sports local networks and ESPN’s streaming service (which will debut first in 2019). After the deal Disney will be in the dominant position in Hollywood (a huge change from when the Walt Disney Studios was that forgotten small player over the hill from Hollywood).
This is a bold move for Disney’s CEO Bob Iger. He’s known for making big bets with acquisitions like Marvel and Pixar. But this deal is almost 10x the same of what Disney paid for Pixar. Not every acquisition by Iger has been perfect (MakerStudios kinda fizzled), but the money rolling in from Marvel, Lucasfilm, and Pixar has Disney’s board of director believing in Iger’s vision.
How much faith do you put this vision for the future of Walt and Roy’s company? Is this the final nail in the coffin of the Disney magic we grew up loving or will it just make the universe of magic that much richer and accessible to the company’s fan base?