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

Lacrosse player Patrick Dodds, 19, got his start playing for the Saanich Tigers in Braefoot Park and has now been drafted to the Calgary Roughnecks for the upcoming National Lacrosse League season. (Devon Bidal/News Staff)
Calgary Roughnecks draft young Saanich lacrosse star for coming NLL season

Going pro at 19 is ‘surreal,’ says Patrick Dodds

For Owen Bains, having autism makes navigating the rules and social norms around COVID-19 challenging, says his mother. (Courtesy Nicole Zimmel)
Pandemic poses serious problems for children with autism, say Victoria parents

Parents of children with autism say COVID-19 is overwhelming and reducing social skills

Nicole Abbott and her 10-month-old daughter, Ophelia, shown here at the Metchosin Fire Hall for the Halloween events last year. Residents are invited to a drive-through version this year. (Black Press Media file photo)
West Shore fire halls take pandemic-safe approach to Halloween

One spooky lane among three drive-thru features by firefighters

Helping others, especially those struggling with mental health issues, keeps MOD Pizza owner Jim Hayden cooking. (RIck Stiebel/News Staff)
NDP Leader John Horgan celebrates his election win in the British Columbia provincial election in downtown Vancouver, B.C., Saturday, Oct. 24, 2020. THE CANADIAN PRESS/Jonathan Hayward
Horgan celebrates projected majority NDP government, but no deadline for $1,000 deposit

Premier-elect says majority government will allow him to tackle issues across all of B.C.

A police pursuit ended with an arrest in Williams Lake on Highway 97 Sunday afternoon. (Facebook video screenshot)
Video catches police pursuit that ends with man kicked, punched in Williams Lake

A video of the arrest is getting widely shared on social media

FILE – Prime Minister Justin Trudeau greets Premier John Horgan during a press conference at the BC Transit corporate office following an announcement about new investments to improve transit for citizens in the province while in Victoria on Thursday, July 18, 2019. THE CANADIAN PRESS/Chad Hipolito
Trudeau congratulates Horgan on NDP’s election victory in British Columbia

Final count won’t be available for three weeks due to the record number of 525,000 ballots cast by mail

Comedic actor Seth Rogen, right, and business partner Evan Goldberg pose in this undated handout photo. When actor Seth Rogen was growing up and smoking cannabis in Vancouver, he recalls there was a constant cloud of shame around the substance that still lingers. Rogen is determined to change that. (Maarten de Boer ohoto)
Seth Rogen talks about fighting cannabis stigma, why pot should be as accepted as beer

‘I smoke weed all day and every day and have for 20 years’

NDP Leader John Horgan elbow bumps NDP candidate Coquitlam-Burke Mountain candidate Fin Donnelly following a seniors round table in Coquitlam, B.C., Tuesday, October 20, 2020. THE CANADIAN PRESS/Jonathan Hayward
Horgan, NDP head for majority in B.C. election results

Record number of mail-in ballots may shift results

The Canadian border is pictured at the Peace Arch Canada/USA border crossing in Surrey, B.C. Friday, March 20, 2020. More than 4.6 million people have arrived in Canada since the border closed last March and fewer than one-quarter of them were ordered to quarantine while the rest were deemed “essential” and exempted from quarantining. THE CANADIAN PRESS/Jonathan Hayward
Majority of international travellers since March deemed ‘essential’, avoid quarantine

As of Oct. 20, 3.5 million travellers had been deemed essential, and another 1.1 million were considered non-essential

Canada’s Chief Public Health Officer Theresa Tam responds to a question during a news conference Friday October 23, 2020 in Ottawa. Canada’s top physician says she fears the number of COVID-19 hospitalizations and deaths may increase in the coming weeks as the second wave continues to drive the death toll toward 10,000. THE CANADIAN PRESS/Adrian Wyld
Canada’s top doctor warns severe illness likely to rise, trailing spike in COVID-19 cases

Average daily deaths from virus reached 23 over the past seven days, up from six deaths six weeks ago

100 Mile Conservation officer Joel Kline gingerly holds an injured but very much alive bald eagle after extracting him from a motorist’s minivan. (Photo submitted)
B.C. driver thought he retrieved a dead bald eagle – until it came to life in his backseat

The driver believed the bird to be dead and not unconscious as it turned out to be

Chastity Davis-Alphonse took the time to vote on Oct. 21. B.C’s general Election Day is Saturday, Oct. 24. (Chastity Davis-Alphonse Facebook photo)
B.C. reconciliation advocate encourages Indigenous women to vote in provincial election

Through the power of voice and education Chastity Davis-Alphonse is hopeful for change

Most Read