Rupert hogs centre stage
Any thought that Rupert Murdoch will be retreating to his Bel-Air estate after 21st Century Fox’s landmark £39bn sale of valuable entertainment assets to Walt Disney has been disabused.
Sounding as enthusiastic as ever about continued ownership of Fox news and its sports rights, the 86-year-old curmudgeon made it clear he would be continuing to run new Fox, alongside son Lachlan, and it would be using the company’s £7.5bn of cash flows to expand its footprint in core news and sports broadcasting.
Indeed, listening to the Aussie mogul on the call to investors, it almost sounded as if he retained a proprietorial interest in Disney well beyond his family’s lingering 5pc stake. Murdoch indicated it was he who persuaded Bob Iger, the Disney boss, to hang around until 2021 and who spoke eloquently about a better Disney charting a course across new frontiers.
Unsaid among all verbiage and presentations is an expectation that James Murdoch will be in the thick of the Disney integration, and finally able to divorce himself from the embarrassment of his stewardship of the news Of The World and the sexual harassment charges faced by some high-profile stars of Fox news. Among the assets James will be taking across to Disney is his beloved national Geographic channel, the Murdoch claim to high culture.
It is no coincidence that this is the week in which two of Australia’s most successful billionaires – Frank Lowy, creator of the Westfield shopping experience, and Murdoch – decided to dismantle the global empires they built.
Lowy’s shopping centres and Murdoch’s media interests look to be poles apart. But the break-up and sale of large sections has been driven by the same forces, in the shape of the march of the digital giants.
In the world of Amazon and online, even the most glitzy of shopping malls is in danger of becoming a cavernous tomb.
The 21st Century Fox production capacity was insufficient on its own to blow out of the water challengers such as netflix, Amazon Prime and Facebook in the battle for direct-to-consumer broadcasting. The Disney deal provides the muscle power and access to Fox streaming pioneer Hulu.
As for Iger and Disney, ownership of Fox’s Star channels and distribution across the fast-growing Indian subcontinent, with its valuable rights to cricket, gives it access to a revenue stream as far away from Mickey Mouse and Star Wars as it is possible to be. Disney also wins the 39pc stake in Sky with its interests in Britain, Ireland, Germany and Italy. T He review of the 21st Century Fox £11bn bid for the 61pc of Sky it doesn’t own will continue. The Competition & Markets Authority (CMA) is due to report to Media Secretary Karen Bradley in mid-January on whether such a deal would reduce media plurality in the UK.
In the unlikely event that Bradley should cave into the critics and halt the transaction, it is clear that the new owners of the Sky stake, Disney, would directly buy the shares instead. It seems unlikely that the former Labour leader ed Miliband, who was an opponent of the original Fox deal, could object to Daffy Duck.
The pity for the UK is that Sky, one of the few great technological companies to come out of Britain, is to be gobbled up by an American behemoth. The fate of Sky news also remains unsettled. Disney has never been a news organisation so its ownership of what is a service adding to plurality in current affairs must be considered fragile.
One possibility, if the CMA clears Fox ownership, is that Sky news would be separated from the main company and sold/ handed back to new Fox or run separately as some kind of trust. But the lack of precision cannot but be unsettling for all those who are involved in Sky news.
The main Fox-Disney deal could also face regulatory challenge in the US. In the Obama years, America’s Federal Communications Commission voiced objections to media deals which hurt competition by discouraging newer players in the market.
There may also be concerns that Disney’s ownership of eSPn channels, together with the Fox regional sports networks, will give it far too much control over sports rights in America, and across the world.
Bob Iger and James Murdoch will spend many hours testifying and lobbying in Washington before the deal is sealed.