Disney buying much of Fox
NEW YORK — Disney is buying a large part of Fox, including its movie and television studios for about $52.4 billion as the home of Mickey Mouse tries to meet competition from technology companies in the entertainment business.
Disney’s all-stock deal for the Murdoch family’s 21st Century Fox gives it the studios that produce the Avatar movies, The Simpsons and Modern Family. Murdoch will form a new company to keep the U.S. television networks, including Fox News Channel, Fox Business Network and Fox Broadcasting. The Simpsons will continue to air on Murdoch’s Fox stations.
The deal also brings Marvel characters such as X-Men and The Avengers under one roof – Disney’s.
In owning these properties, Disney will be in a better position to compete with the likes of Netflix when it launches ESPNand Disney-branded streaming services in the coming years.
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.
Murdoch, who built a global media and entertainment empire out of an inheritance from his father in Australia, said what remains of his family’s business will be able to focus on American news and sports. During a call with investors Thursday, Murdoch and his sons described the move as a return to the company’s lean and aggressive roots.
Murdoch’s new company will get national rights to Major League Baseball, the NFL, NASCAR and college sports through the Fox TV network and cable networks FS1, FS2 and Big Ten Network. Disney is getting Fox’s regional sports networks, including the Yes Network showing the New York Yankees.
Disney also gets some cable and international TV businesses from Fox. Wars movie release from Disney – comes as the entertainment business goes through big changes. TV doesn’t have a monopoly on home entertainment anymore. There’s 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 Lord of the Rings. Facebook, Google and Apple are also investing in video.
As consumers spend more time online, TV’s 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 advertisers’ dollars.
To combat this trend, Disney is launching its own streaming services with exclusive video to sharpen its ability to compete with Netflix for consumer dollars.
Disney CEO Robert Iger said many Fox properties will fit with the new service, including National Geographic and additional Marvel productions. In some cases, though, Disney will have to wait for existing Fox deals to expire. Fox movies are exclusive to HBO through 2022, for example. critic, thinks the deal is a bad idea that ties Disney to older TVdistribution systems – cable and satellite TV – 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&T’s acquisition of Time Warner, in November.
A watchdog group, the Parents Television Council, worries that in getting larger, Disney would be able to extend the traditional big cable bundle to newer online services, resulting in higher prices for consumers.
That said, the White House says President Donald Trump supports the deal and called Murdoch to congratulate him.
“The Murdochs realize they don’t have the same kind of leverage Disney has, the same kind of brand power,” USC Annenberg communications professor Chris 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 will be left with the live events, news and sports that are key parts of the traditional TV bundle.