The Atlanta Journal-Constitution
Shareholders approve Disney’s buyout of Fox
NEW YORK — One empire grows. Another shrinks.
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.
Regulators in more than a dozen countries must still give their approval. But 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-a-lifetime opportunity to gain the bulk needed as a counterattack against the tech giants that have aggressively moved into Hollywood.
“Avatar,” the “X-Men” movies, “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 chief executive, Robert 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 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 goldplated 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 directto-consumer relationship is vital to the future of our media businesses, and it’s our highest priority.”
They aren’t the only ones. A month before Disney closed on Fox, AT&T bought Time Warner, which includes HBO and the Warner Bros. film and TV studios. CBS and Viacom have tussled over whether they should combine. Comcast is likely to make
a play for something else in addition to trying to win Sky in Europe.
And other studios and networks like Discovery, Sony Entertainment, AMC and Lionsgate are looking for opportunities. Verizon, Dish and Charter could also scout out possible mergers.
“Everyone has decided that the future is owning both the content and the distribution,” said Craig Moffett, a longtime media analyst.
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.
Despite the importance of the deal and the sensational 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 Murdoch, Fox’s chief executive, and Lachlan, Fox’s executive chairman, also stayed away.
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.