21st Century Fox/disney deal: a Murdoch retreat?

Shares in Rupert Murdoch’s 21st Century Fox surged almost 10% on Monday, on reports that the group may sell most of its business to Walt Disney, said Hannah Boland in The Daily Telegraph. There’s no certainty a deal will go ahead – preliminary discussions have reportedly stalled over price – but sources suggest Fox is seeking to sell its film studio and TV production assets so it can “focus on news and sports”. Fox’s 39% stake in the Uk-based broadcaster Sky is said to be included in the deal – a decision possibly influenced by the UK competition watchdog’s ongoing “probe” into Fox’s attempt to acquire full control of the broadcaster. (This week Sky separately warned that it “could close down Sky News” if it proves “a sticking point with regulators”.)

One thing this putative deal makes clear is that “scale is a necessity” in a rapidly transforming media landscape, said Jennifer Saba on Reuters Breakingviews. The addition of 21st Century Fox’s movie studio would allow Disney boss Bob Iger to “bulk up” the “Magic Kingdom” as it takes on streamers such as Netflix and Amazon. Fox, too, “has acknowledged the need for scale” with its failed $80bn tilt at Time Warner in 2014. That’s what makes this “possible retreat” by the Murdochs “all the more puzzling”. Given the painstaking way Rupert Murdoch has promoted his sons to take the reins of the Fox conglomerate, “a reversal would be stunning”.

Not necessarily, said the Financial Times. The Murdochs may well have concluded that Fox has already lost the battle for scale in the movie business, and have therefore opted for “flight over fight”. Even if the Disney deal falls through, there will be plenty of other interested buyers. 21st Century Fox, it seems, has “effectively put itself up for sale”.