Disney buying part of 21st Century Fox in $52.4B deal

Disney buying part of 21st Century Fox in $52.4B deal

Disney is buying a large part of the Murdoch family’s 21st Century Fox for about $52.4 billion

Disney is buying a large part of the Murdoch family’s 21st Century Fox for about $52.4 billion in stock, including film and television studios and cable and international TV businesses, as it tries to meet competition from technology companies in the entertainment business.

The deal gives Disney film businesses including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000, which together are the homes of Avatar, X-Men, Fantastic Four and Deadpool. On the television side, Disney will get Twentieth Century Fox Television, FX Productions and Fox21, with shows including “The Simpsons” and “Modern Family.”

21st Century Fox shareholders will receive 0.2745 Disney shares for each share they own. The transaction also includes approximately $13.7 billion in debt.

Robert Iger will continue as chairman and CEO of The Walt Disney Co. through the end of 2021.

Before the buyout, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company that will be spun off to its shareholders. That Rupert Murdoch and his sons were willing to sell off much of the business that has been built up over decades came as a shock to the entertainment industry.

The entertainment business is going through big changes. TV doesn’t have a monopoly on home entertainment anymore. There’s Netflix, which is spending up to $8 billion on programming next year. Amazon is building its own library, having splashed out on global TV rights to “Lord of the Rings.” Facebook, Google and Apple are also investing in video.

As consumers spend more time online, TV’s share of U.S. ad spending is shrinking. Advertisers are following consumer attention to the internet, where Google and Facebook win the vast majority of advertisers’ dollars.

“We’ve been talking about cord cutting for the better part of a decade. But now it’s real,” USC Annenberg communications professor Chris Smith said. The media companies have to compete with the internet giants for consumers’ attention — and the younger generations pay more attention to YouTube, Facebook and other “platforms” than traditional TV, Smith said.

To combat this trend, Disney is launching new ESPN- and Disney-branded streaming services over the next couple of years. It could beef them up with some of the assets it’s acquiring from Fox, making them exclusive to its services and sharpening its ability to compete with Netflix for consumer dollars.

“The core underlying driver for this deal in our opinion is the impending battle royale for content and streaming services vs. the Netflix machine,” GBH analyst Daniel Ives wrote.

Not everyone thinks this is a good bet by Disney, though. Rich Greenfield, a longtime Disney critic, thinks the deal is a bad idea that ties Disney to older TV-distribution systems — cable and satellite TV — rather than helping it look toward the future.

He also notes that regulators may not like the idea of combining two major movie studios. The Justice Department surprised many in the industry and on Wall Street when it sued to block another media megamerger, AT&T’s acquisition of Time Warner, in November.

___

MURDOCH FAMILY TAKES A BOW

Rupert Murdoch built 21st Century Fox and News Corp. out of an inheritance from his father in Australia. He bought a string of papers there, in the U.K. and the U.S., building an influential platform for his views. He expanded into TV and movies, launching the Fox network and Fox News and changing the face of American news and entertainment.

“Rupert has spent many, many years assembling the components of his empire,” said NYU business professor Samuel Craig, who specializes in the entertainment industry.

Rupert Murdoch has ostensibly already handed the reins over to a new generation at Fox. His son James is CEO, while his other son, Lachlan, like Rupert, has the title of executive chairman.

The Murdoch empire has already been divided. After a phone-hacking newspaper scandal in the U.K., News Corp. was split off into a separate company for the publishing and newspaper businesses, which include the New York Post, The Wall Street Journal, The Sun and The Times in the U.K., and book publisher HarperCollins. Now Fox is also being split up as the company sets itself up to deal with the growing power of the tech industry.

“The Murdochs realize they don’t have the same kind of leverage Disney has, the same kind of brand power,” Smith said.

It would be harder to launch a Fox-branded streaming service that attracts lots of the new generation of consumers, for example. Smith said that makes it a great time to sell off the entertainment business.

Fox is also selling to Disney its substantial overseas operations. It is offloading its 39 per cent stake in European satellite-TV and broadcaster Sky after running into regulatory roadblocks in the U.K. trying to take over the rest of the company, in part because of how Fox handled the sexual harassment scandal at Fox News. Disney is also acquiring Star India, a major media company with dozens of sports and entertainment channels.

Fox will be left with the live events, news and sports, that are key parts of the traditional TV bundle. There is speculation that the Murdochs would want to recombine what’s the slimmed-down Fox with News Corp.

___

MIGHTIER MOUSE

It’s not clear what Disney will want or be able to include from Fox in its own upcoming services. But it’s possible to make some educated guesses.

The Disney-branded service, expected in 2019, will have classic and upcoming movies from the studio, shows from Disney Channel, and the “Star Wars” and Marvel movies.

Disney will also win majority control of Hulu, both its live-TV service and the older service with a big library of TV shows.

Disney could continue to add movies and TV shows from Fox’s library to its services, making them more attractive compared with Netflix’s offerings. The combined libraries of the Disney and Fox movie and TV studios could have more titles than Netflix, Barclays analyst Kannan Venkateshwar said. Buying Fox’s FX networks will add edgy TV shows that complement Disney’s long list of kid-friendly series and films, he said.

Greenfield, however, notes that a lot of programming wouldn’t be immediately available to Disney. Fox movies are exclusive to HBO through 2022, for example.

Disney also plans an ESPN Plus service for next year. It isn’t a duplicate of the ESPN TV network, but it will stream tennis matches along with major-league baseball, hockey and soccer games, as well as college sports. It might be able to add more sports if Disney buys Fox’s 22 local sports networks — cable channels that show popular sports in the viewer’s region.

Disney also owns Marvel, but not all the Marvel characters. It’s made movies starring Thor, Doctor Strange and Captain America and the Avengers crew. But the X-Men are at Fox. Bringing them home under one roof could mean movies with more of the characters together.

___

Michelle Chapman in New York contributed to this report.

Tali Arbel, The Associated Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Cathy Armstrong, executive director of the Land Conservancy, Paul Nursey CEO of Destination Greater Victoria and Saanich Coun. Susan Brice helped to kick off the annual Greater Victoria Flower Count at Abkhazi Garden Monday. This year, the flower count is less about rubbing the region’s weather in the rest of Canada’ faces, and more about extending a bouquet of compassion and love. (Nina Grossman/News Staff)
2021 Greater Victoria Flower Count sows seeds of compassion

Friendly flower count competition runs from March 3 to 10

The Save-On-Foods Memorial Centre has reopened with 45 shelter spots for people experiencing homelessness in Victoria. (Courtesy of Save-On-Foods Memorial Centre)
Save-On-Foods Memorial Centre shelter in Victoria reopens with spots for 45 people

Arena is an interim step until long-term housing is found

(Black Press Media file photo)
A disruptive rider was forced to leave a BC Transit bus on Monday morning. (Black Press Media File Photo)
Greater Victoria students lose bid for transit commission voting seat

Commission members took issue over students not being elected officials

Island Health chief medical officer Dr. Richard Stanwick receives a first dose of Pfizer vaccine, Dec. 22, 2020. (B.C. government)
COVID-19: B.C. seniors aged 80+ can start to sign up for vaccination on March 8

Long-term care residents protected by shots already given

Langley resident Carrie MacKay shared a video showing how stairs are a challenge after spending weeks in hospital battling COVID-19 (Special to Langley Advance Times)
VIDEO: Stairs a challenge for B.C. woman who chronicled COVID-19 battle

‘I can now walk for six (to) 10 minutes a day’

B.C. Attorney General David Eby speaks in the legislature, Dec. 7, 2020. Eby was given responsibility for housing after the October 2020 provincial election. (Hansard TV)
B.C. extends COVID-19 rent freeze again, to the end of 2021

‘Renoviction’ rules tightened, rent capped to inflation in 2022

Face mask hangs from a rear-view mirror. (Black Press image)
B.C. CDC unveils guide on how to carpool during the pandemic

Wearing masks, keeping windows open key to slowing the spread of COVID-19

Churches, including Langley’s Riverside Calvary Church, are challenging the regulations barring them from holding in-person worship services during COVID-19. (Langley Advance Times file)
Det. Sgt. Jim Callender. (Hamilton Police Service screenshot)
B.C. man dead, woman seriously injured after shooting in Hamilton, Ont.

The man was in the process of moving to the greater Toronto area, police say

Police have identified the vehicle involved in the Feb. 14 hit-and-run in Chemainus and are continuing to investigate. (Black Press Media files)
Police seize and identify suspect vehicle in hit-and-run

Investigation into death expected to be lengthy and involved

(Black Press file photo)
Child in critical condition, homicide investigators probe incident near Agassiz

The child was transported to hospital but is not expected to survive

Sewage plant in Lower Mainland, operated by Metro Vancouver. (Metro Vancouver screenshot)
‘Poop tracker’ launches as researchers test Lower Mainland sewage water for COVID-19

‘Studying the virus in wastewater allows researchers to look at an entire population…’

This poster, spreading misinformation regarding COVID-19 restrictions, has been popping up in communities across Vancouver Island.
UPDATED: Poster popping up in Island communities falsely claiming COVID restrictions are over

Unattributed poster claims COVID restrictions ended March 1; Island Health responds

Most Read