Disney, Fox agree to $71.3B purchase
NEW YORK — In separate ballrooms at the Hilton Hotel in Midtown Manhattan on Friday morning, shareholders of The Walt Disney Co. and 21st Century Fox agreed to a $71.3 billion purchase plan that gives Disney the bulk of Rupert Murdoch’s media empire, substantially altering the entertainment landscape.
The shareholder votes brought to a close a sixmonth corporate showdown, waged across two continents by Disney and Comcast, for supremacy in the rapidly changing media business. Murdoch’s trove represented a once-in-alifetime opportunity to gain the bulk needed as a counterattack against the tech giants that have aggressively moved into Hollywood.
Avatar, the X-Men mov-
ies, Titanic and TV shows such as The Simpsons and This Is Us will now be owned by Disney. That adds to an already enviable content stockpile from divisions that include Lucasfilm, Marvel Entertainment and Pixar Animation Studios. The deal also gives Disney the cable networks FX and National Geographic; a controlling stake in the streaming service Hulu, which has more than 20 million subscribers; and Star, one of India’s fastest growing media companies.
Disney’s integration plans for 21st Century Fox include substantial layoffs. The deal received surprisingly speedy approval from U.S. regulators, but foreign governments must still sign off.
Analysts expect that Disney will clear those hurdles by early 2019.
Some people in Hollywood see the acquisition as the sad ending of an era. Disney is acknowledging that the future of television and movie viewing is online and this move could set off a wave of mergers in the film business, which has not seen significant consolidation since 1935, when 20th Century Pictures and Fox Film merged to form 20th Century Fox.
Disney’s chief executive, Robert A. Iger, has staked his legacy on this deal, and to gain control of Fox, he had to fend off an aggressive play by Comcast. Iger and Murdoch originally agreed to a deal in December. After months of maneuvering, Comcast, the Philadelphia-based cable giant, topped Disney’s original bid in June, but Iger returned almost immediately with a much higher offer that mixed cash and stock. Murdoch and the Fox board quickly accepted.
Comcast called it quits soon after, and its chief executive, Brian L. Roberts, offered an olive branch of sorts by releasing a statement congratulating the two companies. Comcast, however, still plans to compete in a separate deal against Disney for control of the European TV broadcaster Sky.
As Silicon Valley behemoths like Netflix, Amazon, Apple and Facebook have pushed into the entertainment world and attracted bigger audiences, old-guard media companies have responded by trying to secure as much gold-plated content as they can. And Disney, for one, will soon unveil a Netflix-style streaming service to deliver its shows and movies straight to viewers.
“One of the most exciting aspects of our Fox acquisition is that it will allow us to greatly accelerate our direct-to-consumer strategy,” Iger said when he announced the deal in December. “We believe creating a direct-to-consumer relationship is vital to the future of our media businesses, and it’s our highest priority.”
At the Disney meeting, shareholders voted on one item. Disney’s final offer was made up of equal parts cash and stock — $35.7 billion in cash, 343 million shares — and Disney investors had to approve the issuing of those shares. The meeting lasted nine minutes. Disney said that voters controlling 68 percent of outstanding shares voted by proxy before the meeting. Of those, 99 percent voted to approve. (There was a lone voice of dissent. When Alan N. Braverman, Disney’s general counsel, opened the floor for shareholder comments, one man stood up and muttered, “I think we are overpaying.”)
Despite the importance of the deal and the dramatic way it played out over many months, Iger and Murdoch did not attend the shareholder votes. Iger was on a previously scheduled overseas trip, and Murdoch similarly decided to keep a commitment in California. Murdoch’s sons, James, Fox’s chief executive, and Lachlan, Fox’s executive chairman, also stayed away.
The Fox shareholder meeting took place in a much smaller ballroom on a subterranean level, with fewer than 60 people present. The meeting lasted less than 10 minutes. But near the end, a longtime shareholder, Philip Berman, stood up at the microphone and said, “Rupert’s dream is complete.”
The deal ends Murdoch’s reign over an entertainment empire he spent six decades building. He will become a significant minority shareholder in Disney and will continue to run his remaining businesses, which include Fox News, the Fox broadcasting network, the cable network FS1 and newspapers like The Wall Street Journal, The New York Post and The Sun in Britain.
Lachlan, the elder son, will become chief executive of the Murdoch family’s remaining TV businesses, which are being collectively called New Fox. James will not join Disney and will leave his father’s company. His plans remain unclear, although he stands to make more than $1 billion in the Disney deal
U.S. antitrust regulators approved the merger on the condition that Disney, which already owns ESPN, divest all of Fox’s 22 regional sports networks, which include channels like the New York Yankees’ YES network. Guggenheim Securities has estimated the value of the chain at $22 billion.