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

The Week - - City -

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”.

Mur­doch: a “pos­si­ble re­treat”

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