Under proposed agreement, Walt Disney Co. will buy film, television assets of 21st Century Fox
Walt Disney Co. agreed on Thursday to buy key film and television assets of 21st Century Fox, in a $52.4 billion deal that bolsters the media-entertainment powerhouse’s challenge to Netflix and emerging rivals in the streaming wars.
The blockbuster stock transaction also vastly reduces the Fox media empire built by Rupert Murdoch, leaving the 86-year-old tycoon and his two sons with a more tightly focused group, which includes the Fox broadcast network, Fox News Channel and sports channels.
The deal was quickly hailed by U.S. President Donald Trump, who congratulated Murdoch—in stark contrast to his administration’s opposition to a tie-up between AT&T and Time Warner.
It will see Disney acquire the vaunted Fox Hollywood film and television studios, cable entertainment networks and international TV businesses, bringing popular entertainment properties including X-Men, Avatar, The Simpsons, FX Networks and National Geographic into Disney’s portfolio.
“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” said Disney chief executive Robert Iger in a statement.
Iger, who was previously expected to step down in 2019, will now stay on through 2021.
Disney’s move to acquire the Fox library of content is seen as a bid to bolster its arsenal against Netflix and Amazon as well as emerging tech players such as Facebook and Apple, which are cashing in on a move towards streaming services and away from traditional pay TV packages. Disney, which owns the ABC television network, ESPN and has major studios in Hollywood, has been preparing to launch its own streaming service.
Trump’s spokeswoman Sarah Sanders told reporters: “I know that the president spoke with Rupert Murdoch earlier today, congratulated him on the deal, and thinks that—to use one of the president’s favorite words—that this could be a great thing for jobs.”
Independent media analyst Alan Wolk saw a number of positives for Disney in the deal, which gives it a controlling 60-percent stake in America’s third-largest streaming platform, Hulu. By controlling Hulu, Disney gets “a platform with which to take on Netflix and Amazon, particularly internationally” as well as “a whole lot of data about their users, something they have not previously had,” Wolk said. “If Disney includes live sports with Hulu, that could give it a huge edge over Netflix and Amazon.”
The deal would also expand Disney’s global footprint with Fox TV unit Star India—known for sports and entertainment—and Fox’s 39 percent share in the European-based Sky. Fox has been seeking the remainder of Sky but has faced regulatory scrutiny in Britain.
Analysts have said the deal could face considerable scrutiny by antitrust regulators because of the tie-up between two of the largest film and television groups.
The news comes as another major media deal, between AT&T and Time Warner, has been challenged in an antitrust filing by the U.S. Justice Department.
Time Warner is the parent company of CNN, which is critical of the Trump administration, while Murdoch’s Fox News is a strong ally.
Matt Stoller of the Open Markets Institute, which follows monopoly issues, said the deal could further concentrate market power. Stoller tweeted, “This isn’t about competition over better content, it’s just about who will be the last monopoly standing.”
Prior to the deal going through, 21st Century Fox will transfer 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.
Rupert Murdoch said in the statement issued by the companies: “We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry.”
A separate statement from the Murdoch-led group said the “new Fox” would be “a growth company centered on live news and sports brands, anchored by the strength of the Fox Network.” He added: “It is born out of an important lesson I’ve learned in my long career in media: namely, content and news relevant to viewers will always be valuable.”
It will also include broadcast and cable rights to sports from the National Football League, Major League Baseball, World Cup football and Nascar.
The deal has sparked speculation that Murdoch’s son James would play a key role at Disney, but there was no announcement in the release on that.
Iger, speaking on ABC’s Good Morning America, said James Murdoch would be “integral to the integration process” and added that there would be discussions “whether there is a role for him or not at our company.”
The deal reverses course for Rupert Murdoch, an Australian-born U.S. citizen, who has built up a vast media and entertainment empire over the past decades. In 2013 he split off the newspaper publishing group which retained the original name of the group, News Corp., making 21st Century Fox an independent entity.
Murdoch began a gradual withdrawal from both companies in 2013, and now shares the title of chairman with his eldest son Lachlan at both firms.