The Disney-Fox Merger Is Ready to Proceed, Having a Huge Impact on U.S Media
There are rumors that Walt Disney Co (NYSE:DIS) and Twenty-First Century Fox Inc (NASDAQ:FOX) will soon merge. The rumors that Disney intends to buy Fox have been building for the past few weeks, as the rise in Fox’s stock price reflects. After an apparent snag, the two Hollywood studios have resumed talks and Mickey Mouse will soon own a large stake in Fox. (Source: “Disney Re-Engages in Talks to Buy 21st Century Fox Assets,” The Wall Street Journal, December 2, 2017.)
Disney would acquire big chunks of the Fox empire, namely its movie and television studios, the “FX” and “NatGeo” cable channels, a piece of SKY PLC (LON:SKY) in the U.K., “Star India” cable in India, and parts of “Hulu,” the American video streaming site in which Disney has been increasing its ownership and influence.
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Hulu is a big aspect of Disney’s attraction to Fox. Disney has long wanted to establish its own streaming service, to exploit and expand its long film catalog, which would allow it to pose a serious threat to “Netflix” or “Amazon Prime.”
As part of the deal, James Murdoch, Rupert Murdoch’s son, could split from the Fox group to take over from Bob Iger as CEO of Disney. (Source: “DealBook Briefing: Murdochs Could Part Ways in a Disney Deal,” The New York Times, December 6, 2017.)
Disney Is Not the Only Suitor
Disney may not be the only big Hollywood group willing to buy Fox. It was only to be expected, given the merger frenzy that’s brewing, that such groups—and competitors—like Comcast Corporation (NASDAQ:CMCSA) and Sony Entertainment would also have been wining and dining Fox; especially as talks seemed to have stalled for a while.
But, like a suitor who realizes he/she’s not going to find a more compatible partner, Disney may lock in the deal before one of its rivals has a chance to clinch the potentially $60.0-billion mega-deal, which could be signed before the end of 2017. Of course, rivals could still step in with a better offer.
One of the big aspects of the deal concerns what will not go to Disney. For the time being, it appears that “Fox News,” “Fox Sports,” “Fox Broadcasting,” and some TV channels would remain beyond the scope of the merger. In fact, if James Murdoch could replace Iger at Disney, his brother, Lachlan Murdoch, could look after the pieces that Disney won’t be acquiring. (Source: “Disney-Fox Deal: Who Would Stay, Who Would Go if Murdochs Decide to Sell,” Variety, December 5, 2017.)
A Huge Impact
A Disney-Fox merger, even leaving out a few bits, would have a big impact on American—or global—media. Consider that the resulting entity would own Disney, Pixar, LucasFilm, and Fox Searchlight Pictures. Alone, those represent some of the biggest blockbuster movie-making machines ever. Meanwhile, the Magic Kingdom could spread some of its special stardust to improve the performance of Fox’s movie and TV units. (Source: “Here Are 4 Takeaways From The Rumored Fox-Disney Deal,” Forbes, December 6, 2017.)
Not to be outdone, Fox does bring some big names to the union. Fox is famous for “The Simpsons” and other shows the company produces for NBC, ABC, and CBS. As for Disney, which owns the sports network “ESPN,” it could benefit from synergies with Fox’s own sports properties. But the biggest impact might well be in the streaming services.
Given Netflix’s plans to boost programming in 2018 to the tune of some $8.0 billion, this will be one of the fields that the combined Disney-Fox will pursue. The American consumer might even benefit from the competition. Either rival streaming services lower the cost of subscriptions or they make more films and series available. There’s the risk that advertising revenue could become more rarefied as the number of video streaming services increases, just like what happened to the Internet. (Source: Ibid.)
