Blockbuster deal includes 20th Century Fox film studio and programming library, cable and sports networks, and more
In a history-making deal, The Walt Disney Company agreed to acquire much of 21st Century Fox for $52.4 billion. The deal was speculated about for the last few weeks on this blog and elsewhere, as 21st Century Fox owner Rupert Murdoch was looking to cash out.
Other companies – Comcast, Verizon, and Sony – dropped out of the bidding, leaving Disney as the sole suitor.
The deal comes as studios are trying to combat streaming giants Netflix and Amazon, who’ve gained plenty of traction with original programming – drawing viewers away from the major broadcast networks, local television stations, and cable networks. The move brings down the curtain on the 20th Century Fox film studio bought in 1985 by Murdoch, who also acquired the Metromedia station group in 1986 to form the basis of the Fox Broadcast Network. The film studio was founded in 1915 by William Fox (as Fox Film), and began television production in 1949.
Robert Iger remains as CEO of Disney; his contract was recently extended to 2021.
Since yours truly already covered much of what would happen if a deal this big would come to fruition (click here and here to read recent articles I wrote), here’s a quick rundown of the assets sold…and what wasn’t:
– The 20th Century Fox film studio and TV production operations. The deal includes Fox Searchlight, Fox 21, Fox 2000, FX Productions, Twentieth Television, etc. Rights to Modern Family, American Horror Story, Bob’s Burgers, and others now belong to Disney.
– Fox Sports’ regional sports channels, including Yes, Fox Sports North, Fox Sports Wisconsin, and Fox Sports Midwest (all likely to rebranded with the ESPN name)
– Fox cable networks, including FX, FXX, National Geographic, and Nat Geo Wild
– Brings Marvel properties X-Men, Fantastic Four, Deadpool, and Legion into the Disney fold (Marvel was bought by Disney in 2009)
– Unites all Star Wars properties under one roof
– Fox’s share in Hulu, which pushes Disney’s stake to 60 percent
– 50 percent Endemol Shine NorthAmerica
– More than 100,000 hours of content from the Twentieth Television and 20th Century Fox TV and film library, including the Batman 1966 TV show and other classics, including M*A*S*H, The Mary Tyler Moore Show, How I Met Your Mother, The Simpsons, Futurama, and American Dad. Films include Planet Of The Apes, Cleopatra, Bachelor Party,
– A bunch of International channels, including Fox’s stake in Sky and StarIndia
What Fox gets to keep:
– Fox’s owned-and-operated stations, including Chicago’s WFLD-TV and WPWR-TV
– Fox News and Fox Business
– Fox Sports
– FS1 and FS2
– Fox Broadcasting
– Big Ten Network
Fox will take these properties and spin them off into a new holding company headed by Murdoch.
Robert Iger on Thursday’s news: “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. We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”
Murdoch on the merger: “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. Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”
Murdoch said he may be looking to buy more stations as the FCC recently relaxed media rules, including the elimination of the cross-ownership rule, which would allow him to re-combine the “new” Fox with News Corp., as both split in 2013. Sinclair is in the process of buying Tribune Co., and would be the biggest owner of Fox affiliates. But with the loss of the studio and the television production arm, Fox would now have to buy from outside suppliers.
One such project for syndication cleared on the Fox O&Os was announced earlier this week – a new courtroom strip called Caught In Providence – is produced by Delmar-Mercury, not Twentieth Television.
As predicted earlier, the Writer’s Guild of America (West) is not happy about the deal in a press release: “In the relentless drive to eliminate competition, big business has an insatiable appetite for consolidation. Disney and Fox have spent decades profiting from the oligopolistic control that the six major media conglomerates have exercised over the entertainment industry, often at the expense of the creators who power their television and film operations. Now, this proposed merger of direct competitors will make matters even worse by substantially increasing the market power of a combined Disney-Fox corporation.”
Look for other unions, such as SAG-AFTRA to join in opposition as well. In other words, enjoy the labor peace while you can.
The Justice Department is expected to review the deal and there are questions whether or not this deal would pass regulatory muster. The transaction gives Disney a 39 percent share of the movie business – quite a huge number. Already, The Justice Department is forcing AT&T to sell CNN/Turner Networks or DirecTV as conditions to pass regulatory muster.
And of course, there will be layoffs. ESPN already went through two rounds of layoffs this year.
Unclear is what role Fox Television Group chairman Dana Walden and Gary Newman would play in the new company, in addition to other Fox executives (such as Peter Rice) in big roles. Also unclear is whether current 20th Century Fox’s television production arm would fold into ABC Studios, the name of Disney’s network operations. Also unclear is the fate of several future theatrical projects at Fox, including a Bob’s Burgers movie scheduled to be released in 2020.
Many showrunners’ futures are also up in the air – notably Seth MacFarlane, Kurt Sutter, and others. Earlier this year, ABC Studios lost Shonda Rhimes to a new deal at Netflix.
For Disney, the deal gives them tremendous clout in the media industry – particularly as they are gearing up to launch two over-the-top services in 2019: a general entertainment service and ESPN Plus. In terms of traditional broadcasting, they’ll have eight owned-and-operated stations, including Chicago ratings powerhouse WLS-TV and sports radio ESPN 1000 (WMVP-AM).
Across town, Fox is preparing for a slimmed-down operation. The network as we know it now would likely be unrecognizable years from now, with no in-studio fare to draw off of. Ironically, it was the success of Fox in the first place that led to the demise of the financial interest and syndication rules, which prohibited networks owning studios and vice versa. Now 20th Century Fox is being sold to another conglomerate, and would be operating without one in the post fin-syn era where you need a studio to be hooked up with. I’m certain this isn’t the future Walt Disney envisioned.
Or did he?