Disney to Acquire Large Portion of 21st Century Fox

Disney to Acquire Large Portion of 21st Century Fox

Disney Co. announced on Thursday that it has finalized a $52.4 billion deal to buy a large portion of Rupert Murdoch’s Century Fox media.  If approved by regulators, the company would acquire 20th Century Fox film and television studio, National Geographic, FX, and all of Fox’s regional sports channels.  It would also take over Fox’s pay-TV service in India, its international portion, and one of the major Hollywood film studios would be eliminated.  Disney would assume about $14 billion in debt, making the value of the overall deal an estimated $66 billion.

“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,” chairman and chief executive of Disney, Bob Iger, said in a statement.

“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,” Iger said.

The acquisition won’t be final on paper until 2019, according to Disney, because the company still needed to get approval from regulators in Washington and in other countries.  Disney has indicated it will be responsible for paying 21st Century Fox a massive $2.5-billion breakup fee if Disney fails to secure the required approvals for the portion it seeks.  Once the transaction is complete, Rupert Murdoch and his family members will become the second largest shareholders in Disney.

“This acquisition reflects a changing media landscape,” Iger told industry analysts, citing the demands of “today’s empowered consumers” for content and their desire to enjoy media across a variety of platforms.  The deal “will allow us to greater accelerate our direct-to-consumer strategy,” he added. “It’s a very important move forward.”

In other words, the company is focused on the ever-growing need for content to be easily streamed by a variety of devices.  The deal marks another step in the company’s plan to remain competitive.  Under Iger’s direction, Disney bought Pixar Studios in 2006, followed by Marvel Entertainment in 2009 and Lucasfilm in 2012.  This year, Disney spent $1.6 billion to gain a majority stake in BamTech, an online streaming platform that Disney plans to use.

“The core underlying driver for this deal…is the impending battle royale for content and streaming services vs. the Netflix machine,” Daniel Ives, head of technology research for GBH Insights, said. The “appetite for content among media companies [is] reaching a feverish pitch.”

Murdoch says that will similarly benefit from the changes. “With today’s announcement, we launch the next great leg of our journey,” he said. “The world of media has obviously been undergoing rapid change.  New technologies, competitors and shifting consumer preferences have redrawn the whole media map…Are we retreating?  Absolutely not.  We are pivoting at a pivotal moment.”

His son, Lachlan Murdoch, confirmed his father’s sentiments, saying that Fox’s strategy is shifting to keep up with demand.  “The new Fox is about returning to our roots as a lean, aggressive challenger brand,” he said.

Sources:

Disney Agrees to Buy Key Parts of 21st Century Fox in $52.4 Billion Deal

Disney buys much of Rupert Murdoch’s 21st Century Fox in deal that will reshape Hollywood