Disney is buying a large part of the Murdoch familyB次元官网网址檚 21st Century Fox for about $52.4 billion in stock, including film and television studios and cable and international TV businesses, as it tries to meet competition from technology companies in the entertainment business.
The deal gives Disney film businesses including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000, which together are the homes of Avatar, X-Men, Fantastic Four and Deadpool. On the television side, Disney will get Twentieth Century Fox Television, FX Productions and Fox21, with shows including B次元官网网址淭he SimpsonsB次元官网网址� and B次元官网网址淢odern Family.B次元官网网址�
21st Century Fox shareholders will receive 0.2745 Disney shares for each share they own. The transaction also includes approximately $13.7 billion in debt.
Robert Iger will continue as chairman and CEO of The Walt Disney Co. through the end of 2021.
Before the buyout, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox B次元官网网址 Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company that will be spun off to its shareholders. That Rupert Murdoch and his sons were willing to sell off much of the business that has been built up over decades came as a shock to the entertainment industry.
The entertainment business is going through big changes. TV doesnB次元官网网址檛 have a monopoly on home entertainment anymore. ThereB次元官网网址檚 Netflix, which is spending up to $8 billion on programming next year. Amazon is building its own library, having splashed out on global TV rights to B次元官网网址淟ord of the Rings.B次元官网网址� Facebook, Google and Apple are also investing in video.
As consumers spend more time online, TVB次元官网网址檚 share of U.S. ad spending is shrinking. Advertisers are following consumer attention to the internet, where Google and Facebook win the vast majority of advertisersB次元官网网址� dollars.
B次元官网网址淲eB次元官网网址檝e been talking about cord cutting for the better part of a decade. But now itB次元官网网址檚 real,B次元官网网址� USC Annenberg communications professor Chris Smith said. The media companies have to compete with the internet giants for consumersB次元官网网址� attention B次元官网网址� and the younger generations pay more attention to YouTube, Facebook and other B次元官网网址減latformsB次元官网网址� than traditional TV, Smith said.
To combat this trend, Disney is launching new ESPN- and Disney-branded streaming services over the next couple of years. It could beef them up with some of the assets itB次元官网网址檚 acquiring from Fox, making them exclusive to its services and sharpening its ability to compete with Netflix for consumer dollars.
B次元官网网址淭he core underlying driver for this deal in our opinion is the impending battle royale for content and streaming services vs. the Netflix machine,B次元官网网址� GBH analyst Daniel Ives wrote.
Not everyone thinks this is a good bet by Disney, though. Rich Greenfield, a longtime Disney critic, thinks the deal is a bad idea that ties Disney to older TV-distribution systems B次元官网网址� cable and satellite TV B次元官网网址� rather than helping it look toward the future.
He also notes that regulators may not like the idea of combining two major movie studios. The Justice Department surprised many in the industry and on Wall Street when it sued to block another media megamerger, AT&TB次元官网网址檚 acquisition of Time Warner, in November.
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MURDOCH FAMILY TAKES A BOW
Rupert Murdoch built 21st Century Fox and B次元官网网址 Corp. out of an inheritance from his father in Australia. He bought a string of papers there, in the U.K. and the U.S., building an influential platform for his views. He expanded into TV and movies, launching the Fox network and Fox B次元官网网址 and changing the face of American news and entertainment.
B次元官网网址淩upert has spent many, many years assembling the components of his empire,B次元官网网址� said NYU business professor Samuel Craig, who specializes in the entertainment industry.
Rupert Murdoch has ostensibly already handed the reins over to a new generation at Fox. His son James is CEO, while his other son, Lachlan, like Rupert, has the title of executive chairman.
The Murdoch empire has already been divided. After a phone-hacking newspaper scandal in the U.K., B次元官网网址 Corp. was split off into a separate company for the publishing and newspaper businesses, which include the New York Post, The Wall Street Journal, The Sun and The Times in the U.K., and book publisher HarperCollins. Now Fox is also being split up as the company sets itself up to deal with the growing power of the tech industry.
B次元官网网址淭he Murdochs realize they donB次元官网网址檛 have the same kind of leverage Disney has, the same kind of brand power,B次元官网网址� Smith said.
It would be harder to launch a Fox-branded streaming service that attracts lots of the new generation of consumers, for example. Smith said that makes it a great time to sell off the entertainment business.
Fox is also selling to Disney its substantial overseas operations. It is offloading its 39 per cent stake in European satellite-TV and broadcaster Sky after running into regulatory roadblocks in the U.K. trying to take over the rest of the company, in part because of how Fox handled the sexual harassment scandal at Fox B次元官网网址. Disney is also acquiring Star India, a major media company with dozens of sports and entertainment channels.
Fox will be left with the live events, news and sports, that are key parts of the traditional TV bundle. There is speculation that the Murdochs would want to recombine whatB次元官网网址檚 the slimmed-down Fox with B次元官网网址 Corp.
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MIGHTIER MOUSE
ItB次元官网网址檚 not clear what Disney will want or be able to include from Fox in its own upcoming services. But itB次元官网网址檚 possible to make some educated guesses.
The Disney-branded service, expected in 2019, will have classic and upcoming movies from the studio, shows from Disney Channel, and the B次元官网网址淪tar WarsB次元官网网址� and Marvel movies.
Disney will also win majority control of Hulu, both its live-TV service and the older service with a big library of TV shows.
Disney could continue to add movies and TV shows from FoxB次元官网网址檚 library to its services, making them more attractive compared with NetflixB次元官网网址檚 offerings. The combined libraries of the Disney and Fox movie and TV studios could have more titles than Netflix, Barclays analyst Kannan Venkateshwar said. Buying FoxB次元官网网址檚 FX networks will add edgy TV shows that complement DisneyB次元官网网址檚 long list of kid-friendly series and films, he said.
Greenfield, however, notes that a lot of programming wouldnB次元官网网址檛 be immediately available to Disney. Fox movies are exclusive to HBO through 2022, for example.
Disney also plans an ESPN Plus service for next year. It isnB次元官网网址檛 a duplicate of the ESPN TV network, but it will stream tennis matches along with major-league baseball, hockey and soccer games, as well as college sports. It might be able to add more sports if Disney buys FoxB次元官网网址檚 22 local sports networks B次元官网网址� cable channels that show popular sports in the viewerB次元官网网址檚 region.
Disney also owns Marvel, but not all the Marvel characters. ItB次元官网网址檚 made movies starring Thor, Doctor Strange and Captain America and the Avengers crew. But the X-Men are at Fox. Bringing them home under one roof could mean movies with more of the characters together.
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Michelle Chapman in New York contributed to this report.
Tali Arbel, The Associated Press
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