Disney to acquire Fox assets for $52 billion
TAKING OVER Disney to get Fox’s film and TV studios, cable networks and international businesses, including Star India
NEW YORK : Walt Disney Co. has struck a deal to buy film, television and international businesses from Rupert Murdoch’s Twenty-first Century Fox Inc. for $52.4 billion in stock as the world’s largest entertainment company seeks even greater scale to combat growing digital rivals Netflix Inc. and Amazon.com Inc.
The deal brings to a close more than half a century of expansion by Murdoch, 86, who turned a single Australian newspaper he inherited from his father at the age of 21 into one of the world’s most important global news and film conglomerates.
Shares of Fox, which have surged 35% since talk of the deal surfaced in early November, were slightly lower in pre-market trading.
Disney shares also edged lower as investors fretted about dilution from the all-stock deal. Disney said it expects to buy up to $20 billion of its own shares to offset that dilution.
Fox stockholders will receive 0.2745 Disney shares for each share held and will end up owning about a quarter of Disney.
Under the deal, expected to close in 12 to 18 months, Disney acquires 21st Century Fox’s film and television studios, its cable entertainment networks and international TV businesses.
Those assets include some blockbuster Marvel superhero pictures that Disney did not already own and the “Avatar” and “X-men” franchises, as well as hit TV shows such as “The Simpsons”.
The acquisition will give Disney a new pipeline of shows as well as movies, as it battles technology companies spending billions of dollars on programming shown online to siphon audiences away from traditional TV networks.
“This is the right move at the right time as the marriage of these assets creates a much more formidable Disney,” said Daniel Ives, an analyst at GBH Insights in a note to clients.
Immediately before the acquisition, Fox will separate the Fox Broadcasting network and sta- tions, Fox News Channel, Fox Business Network, its sports channels FS1, FS2 and the Big Ten Network into a newly listed company that it will spin off to its shareholders.
“It is born out of an important lesson I’ve learned in my long career in media: namely, content and news relevant to viewers will always be valuable,” 21st Century Fox Executive Chairman Murdoch said in statement.
Disney Chief Executive Bob Iger, 66, will extend his tenure through the end of 2021 to oversee the integration of the Fox businesses.
He has already postponed his retirement from Disney three times, saying in March he was committed to leaving the company in July 2019. NEWDELHI: The takeover of 21st Century Fox’s film and TV business by Walt Disney means that Murdoch-owned Star India’s businesses, including 49 entertainment channels and 10 sports channels would be absorbed by Disney along with its digital streaming platform Hotstar.
Not just that, Disney would also acquire Star’s stake in direct-to-home platform Tata Sky in India. This would catapult Disney, currently known for its children’s channels and distribution of Hollywood films, into India’s biggest broadcaster.
In investor calls, 21st Century Fox has forecast that Star will report $500 million in operating profit in India in the year to June 2018.
The deal announced on Thursday bodes well for the India market, said experts.
“This is the mother of all media and entertainment deals and will overnight make Disney the number one network in the country. Both Star and Disney will comple- ment each other with missing portfolios in each others’s offerings,” said Raj Nayak, chief operating officer of Viacom18.
“The combined entity can bring many synergies to the table and leverage advertising, distribution, licensing and over-the-top (OTT) revenues besides saving costs on some fronts. The merger will make Disney a formidable powerhouse in the region,” he added. In his previous roles, Nayak has worked with Star as well as consulted with Walt Disney for its entry strategy into India.
Currently, Disney operates eight children and youth entertainment channels in India, namely Disney Channel, Disney Junior and Hungama TV.
It operates Bindaas and film channels UTV Action and UTV Movies, the channels it acquired from Ronnie Screwvala’s UTV Software Communications Ltd for $454 million in the year 2012.
Ten days ago, 21st Century Fox named Uday Shankar, chairman and chief executive of Star India Pvt. Ltd, as president, 21st Century Fox for the Asia region.
Meanwhile, Disney is currently led by country head Abhishek Maheshwari in India.