Fox favours Disney as buyer, insiders say
Company seen as better fit for taking over assets such as film and TV studios, pay-TV
LONDON— 21st Century Fox Inc., the global film and TV company controlled by the Murdoch family, would prefer to sell some assets to Walt Disney Co. because it’s a better strategic fit and presents fewer regulatory hurdles, people familiar with the matter said.
The family is holding talks with Disney, as well as Comcast Corp., about combining certain media businesses with the potential buyers, said the people, who asked not to be identified because the discussions are private. The assets would include the 20th Century Fox film and TV studio and Fox’s stake in the U.K. pay-TV provider Sky Plc, they said. They don’t include Fox News, the Fox broadcast network or the Fox Sports 1 channel.
A deal could open the door for James Murdoch, Fox’s CEO, to join Disney. The Murdochs aim to make a decision by the end of the year, the people said. Whether they pursue a transaction will depend on the price and structure, they said. The Murdochs — Rupert Murdoch, 86, and his sons James and Lachlan, Fox’s top officers — are considering a sale as the market values the group below slower-growing peers.
A deal would dramatically expand Disney’s global reach, giving the world’s largest entertainment company control of Sky, Star India and U.S. cable channels including FX and National Geographic.
Fox, based in New York, declined to comment. Disney, based in Burbank, Calif., didn’t respond to requests for comment.
A deal would shuffle ownership of prized film and TV assets at a time when changing viewer habits are pressuring the television industry’s subscriber and advertising revenue. If an agreement is reached, Disney could also gain majority ownership of Hulu, an online streaming service that competes with Netflix.
As Fox’s CEO, James Murdoch has battled a series of scandals at the company, including sexual-harassment allegations at the top of Fox News that have added regulatory scrutiny to the company’s $15.8-billion bid for the rest of Sky.
Authorities are considering the takeover’s potential impact on media plurality in Britain and whether Sky News would adhere to broadcasting standards under Fox ownership. Critics of Fox have appeared before the U.K.’s Competition & Markets Authority, bringing up concerns over a 2011 phone-hacking scandal at Murdoch-owned newspapers, which scuppered Fox’s first bid for Sky, and the harassment allegations at Fox News.
The talks are occurring against the backdrop of a U.S. Justice Department suit to block AT&T Inc.’s pro- posed $85-billion acquisition of Time Warner Inc. The government has said the merger of a large TV distributor and producer would stifle competition and hurt consumers.
Adeal with Disney might overcome some of those challenges. Disney doesn’t sell TV services directly to consumers in the U.S. CEO Bob Iger has had success acquiring movie studios such as Pixar Animation and Lucasfilm Ltd. and a Fox deal could give Disney a controlling stake in the Hulu video-streaming service.