Disney closes deal with Fox

Published 4 years ago -

Eric Guditz

Copy Editor

On Wednesday March 20th, Disney completed a 71.3-billion-dollar acquisition of 21st Century Fox assets. The deal, announced in December 2017, is Disney’s largest acquisition in its 96-year history. “This is an extraordinary and historic moment for us” said Robert A. Iger, Disney’s Chief Executive.

Disney has already trumped many media conglomerates in terms of influence – the company leads sports television through ESPN, controls the global theme park business and is Hollywood’s top movie operation franchise, with acquired studios Marvel, Pixar and Lucasfilm.

However, tech giants like Apple moving to Hollywood are creating increasing competition, especially with Apple’s recently announced movie and television plans. Verizon and Comcast reportedly floated their own bids for Fox as well. This goes to show that these major companies are wanting new intellectual property for their assets. 

Disney now owns most of Rupert Murdoch’s former empire. This includes the 20th Century Fox movie and television studio, the “X-Men,” “Avatar,” “Simpsons,” and “Alien” franchises, as well as Blue Sky (the “Ice Age” animation studio), the National Geographic and FX cable networks, most of Hulu, and Star (a television-service provider in India.)

  The deal will likely pressure smaller studios to merge with Disney as they struggle to compete, give Disney leverage in box office splits and hinder the growth of Netflix (as Disney now has the right to use Fox content for streaming). As Iger states, “The pace of disruption has only hastened…this will allow us to greatly accelerate our direct-to-consumer strategy, which is our highest priority.”   

  This Disney/Fox deal overshadows Disney’s 1995 purchase of Capital Cities/ABC, which cost 19 billion dollars (equaling 32 billion in today’s money). The latter, which included the acquisition of ESPN, helped Disney flourish for nearly two decades. The newly acquired Fox assets are meant to do the same.

Disney wants to be less dependent on cable channels like ESPN, which has been in decline since the rise of online streaming media. In fact, the company plans to release its own online video streaming service, called Disney+ later this year.

The deal is not without its challenges. Investors will need to view Disney more like a technology company, where near-term financial turbulence is often overlooked. Analysts predict that there will be considerable layoffs – upwards of 3,000.

And, of course, there is the problem of the merging of two very different corporate cultures. Disney must also win the approval of antitrust regulators, so the Justice Department is requiring Disney to sell Fox’s 22 regional sports channels. 

Former speaker of the House, Paul Ryan, recently joined the Fox board. Mr. Murdoch and Roland A. Hernandez, former chief executive of Telemundo, are also board members. Serving as the company’s chief executive is Mr. Murdoch’s older son, Lachlan. According to Bloomberg, the Murdoch family will receive 12 billion dollars in revenue from the deal.

Eric Guditz, a sophomore, is undeclared. He is a Copy Editor for Le Provocateur.

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