The Walt Disney Company is acquiring a vast majority of 21st Century Fox in a blockbuster deal that promises to reshape the media industry and help the mass media and entertainment conglomerate fend off digital nemesis including Netflix.
The $52.4 billion mega deal will merge two of the biggest competitors in the Hollywood.
The reported sale represents a momentous turn in the career of business mogul Rupert Murdoch, who is cashing out after establishing a major media empire. For its part, The Walt Disney Company is adding even more paramount entertainment assets to an already bloated portfolio as it struggles upstart digital media streaming services that have undercut the traditional cable subscription model.
In addition to 21st Century Fox’s motion picture studio and regional sports networks, Disney is purchasing cable channels including FX and National Geographic. Moreover, Disney will also be getting Fox’s stakes in Hulu and European pay-TV provider Sky.
Ahead to the deal negotiation, 21st Century Fox (FOX) will separate the Fox broadcasting network, Fox News Channel, Fox Business Network, and some national sports networks into a brand new media company that will be stretched to its shareholders. The remaining assets would as a matter of choice in the coming years merge with News Corporation, from which they already split dating way back in 2013.
The Walt Disney Company, which counts ESPN brand amongst its precious properties, has suffered as consumers switch off their televisions and spend more hours watching video on-demand online streaming services such as Netflix (NFLX) that are distributed directly to audiences.
The blockbuster deal allows Disney to expand its media content, most especially for streaming services. In addition to getting a majority stake in Hulu once the deal closes, Disney is prepping up to launch two separate video on-demand online streaming services, one for entertainment and another focusing on sports. Disney has started pulling its content out from Netflix in preparation for the launch of its streaming services. With wide range of Fox’s television as well as movie studios and the content they own means adding to the stable of must-watch content it can offer directly to audiences — and that streaming rivals can not.
The deal will be needing to undergo regulatory review and will likely take at least 12-months to close. The Justice Department, which last month filed a lawsuit to block AT&T’s acquisition of Time Warner, will consider to the certain extent the new media company could dominate the market, using its increased leverage to force cable firms and distributors to pay higher licensing fees to distribute Disney and Fox contents.
As the two entertainment giants work to forge the deal and Disney works to integrate its new properties, Bob Iger will remain as chairman and CEO of The Walt Disney Company until 2021.
Alongside 21st Century Fox’s various production firms and distribution networks, Walt Disney also is taking over of the former’s vast catalog of intellectual property. With all that being said, it means that comic book characters like the X-Men and Fantastic Four are now back under the control of Marvel Studios — a status quo that Disney notes in its press release as allowing the media giant to “create richer, more complex worlds of inter-related characters and stories.” It will open the door for fictional characters like Wolverine or Deadpool to cross over into the Marvel Cinematic Universe.
The deal also means that Disney will finally have complete controls to the rights of the original Star Wars film alongside the home video distribution rights for Episodes II through IV. Other franchises that now belong to Disney include the Avatar series, the Aliens movies, Ice Age, The Simpsons, and The X-Files, to name just a few, all of which would be a huge assets for Disney’s upcoming digital streaming services.