Post-merger Moves
With the deal about to close, a game of executive musical chairs is about to begin
Staffers brace for changes as Disney-fox deal closes
there’s a lot of fear in the offices that comprise Rupert Murdoch’s and Bob Iger’s media empires.
By the middle of March, the majority of the staff at 21st Century Fox will be working under new owners. Many are already staring at an uncertain future, one that will likely include brutal rounds of layoffs. The Walt Disney Co., which will also suffer some job losses because of redundancies, has cleared regulatory hurdles in Mexico and Brazil and expects to close the deal for 20th Century Fox, FX, Natgeo and the bulk of Murdoch’s film and television assets within weeks.
Before that happens, the Murdochs will unveil Fox Corp., their slimmed-down media company that boasts Fox Broadcasting and Fox News, to the investment community, likely with details of how it will be capitalized as well as some executive hires. Disney is expected to assume ownership of the rest of Fox within a day of that announcement.
“There are good reasons for people to be nervous,” says Hal Vogel, a veteran media analyst. “There are lots of highly regarded, well-paid executives at both companies, but in some cases there will be two people with the same job. That means there’s only room for one of them.”
There have been mergers in Hollywood before. But the marriage of Fox and Disney is uncharted territory in the media landscape. There’s rarely been an acquisition of this size or a union of two such storied brands with distinct cultures. Disney, with its buttoneddown air, is far removed from the more Darwinian approach to management long favored by Fox. If the two companies are able to successfully join forces and become an entertainment powerhouse, it could provide a road map in an industry that is likely to consolidate further. There is a sense that the landscape will be roiled by more mergers as traditional players try to increase their scale as a way to contend with the streaming and social-media upstarts that are challenging old methods of doing business.
Insiders at the studios say they are uncertain how smoothly Disney will be able to integrate Fox and how quickly it will make its presence felt. As many as 4,000 jobs are expected to be cut in the process, but the expectation is that the first round of layoffs will hit more senior executives who carry higher salaries before things turn to those lower on the corporate ladder. Disney is look- ing for $2 billion in cost synergies. Fox’s film business will likely be more impacted, with the ax falling hardest on jobs in its marketing, sales and distribution arms.
It’s not just layoffs that are worrying employees at the film studio. Producers are concerned that some of their movies will be relegated to Disney Plus, the company’s new streaming service, instead of being released in theaters. Then there are fears that projects that are in various stages of development will be killed or deemed not “Disney-friendly” enough. Some filmmakers were relieved, however, after Disney CEO Iger said that the studio would make R-rated movies after it buys Fox. That’s a rating Disney has avoided as it tries to preserve a family-friendly image.
“I think they talk about potentially rationalizing the film slate,” says John Hodulik, media analyst at UBS. “Having two large studios under one umbrella, they want to make sure the slate is optimized so that they don’t end up competing with themselves.”
A few film executives, such as Twentieth Century Fox Film vice chairman Emma Watts, Fox 2000 chief Elizabeth Gabler and Fox Searchlight co-heads Steve Gilula and Nancy Utley, will be making the move to the combined company. But aside from this core group, few executives have been told if there will be a place for them in the mix, though many have had meetings — which they’ve seen as informal auditions — with the team at Disney. What has bothered staffers at Fox is just how little clarity there’s been about what the future will bring; they say they’ve been stuck in a holding pattern for the past 12 months, unsure if they should start packing boxes or preparing for life as a resident of the Magic Kingdom.
The melding of Fox and Disney’s TV production assets will surely be a complicated process. Fox’s 20th Century Fox Television rivals Warner Bros. as one of the industry’s largest suppliers of scripted TV series. Fox’s production infrastructure also includes Fox