Walt Disney Co. to buy much of 20th Century Fox
LOS ANGELES — Walt Disney Co. has finalized a $52.4 billion deal to buy much of Rupert Murdoch’s entertainment empire, a blockbuster union that would radically transform Hollywood into a land of fewer giants.
The stock deal, which Disney announced Thursday morning, represents Disney’s boldest acquisition yet. If regulators approve it, the Burbank behemoth would take over the prolific 20th Century Fox movie and television studio, Fox’s 22 regional sports channels, cable entertainment brands FX and National Geographic, and Fox’s portfolio of international operations, including a fast-growing pay-TV service in India.
The proposed purchase of much of Murdoch’s 21 Century Fox media company accelerates the trend of media consolidation and would eliminate one of the six major Hollywood film studios. Murdoch would retain control of Fox News Channel, the Fox broadcast network and his newspapers.
Including debt that Disney will assume, the deal is valued at $66 billion. Disney also announced Thursday that its chairman and chief executive, Bob Iger, will remain with the company through 2021.
“We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings,” Iger said in a statement.
“The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world,” Iger said.
Disney’s determination to marshal resources is the clearest signal of heightening tensions between technology giants and legacy media. After decades of dominance, Disney, Time Warner, Fox, CBS and NBC Universal have been scrambling to bulk up to withstand the gale forces coming from Google, Facebook, Netflix, Apple and Amazon.com, which have pushed into television production and distribution.
Audiences for traditional television have been shrinking, in part, because viewers have so many options, including big-budget shows available through Netflix and Amazon. Movie attendance has stagnated. And Netflix is stepping up its output of films, roiling that business along with television.
“The lingering tensions between traditional media and digital platforms has devolved into an open war,” media analyst Michael Nathanson said in a research note. “It has become increasingly difficult for (film) studios to break through the clutter of high-quality TV options in the home.”
The sale of Fox assets marks a partial retreat by Murdoch, who has spent the past 50 years building a media powerhouse from a small newspaper in Australia. But the 86-year-old media baron recognized that Fox’s movie and cable TV operations face an increasingly uncertain future, according to people close to him. And the deal with Disney allows the mogul and his family to become one of the largest shareholders in Disney, a bigger and more valuable media company.
“Maybe the Murdochs have looked at the future and realized their business is a declining asset, worth more today than it ever will be in the future,” Bernstein & Co. media analyst Todd Juenger wrote in a report last week.
But Murdoch is not selling out completely. He is holding onto certain properties, including Fox News, the Fox broadcast network, television stations and Fox Sports 1 and Fox Sports 2. His newspapers such as Wall Street Journal, New York Post, Times of London and a portfolio of Australian properties are housed in a second company, News Corp., that the Murdoch family controls with 39 percent of the voting shares. Some analysts expect Murdoch to eventually fold the remaining Fox assets into News Corp.
Under the terms of the agreement, shareholders of Murdoch’s 21st Century Fox media company will receive 0.2745 Disney shares for each 21st Century Fox share they hold. To accomplish the deal, Fox must first spin off the assets that it plans to retain, including Fox News, the Fox broadcast network, Fox Sports 1 and Fox Sports 2 and the Big Ten network.
Buying Fox would continue the transformation of Disney, which began when Iger took the helm in 2005. He engineered a series of savvy acquisitions, starting with the 2006 purchase of Pixar Animation Studios — creator of “Toy Story,” and “Finding Nemo” — which reinvigorated Disney’s moribund animation division. The company then bought Marvel Entertainment in 2009 and Lucasfilm in 2012, betting big on marquee film brands such as “Star Wars.”