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

Power outages affected thousands of BC Hydro customers in the north on Jan. 14 (File photo) (File photo)
Power outages affect thousands of BC Hydro customers in northern B.C.

Transmission failure led to outages in Prince Rupert and Port Edward

A Prince Rupert port expansion project received a $25 million investment from the provincial government, the Ministry of Transportation and Infrastructure announced on Jan. 14. Seen here is Ridley Terminals Inc., a coal export terminal in Prince Rupert (Shannon Lough / The Northern View)
$25 million government investment in Prince Rupert port expansion project

Prince Rupert port expansion project expected to create more than 2,200 jobs

For the second time in less than a year, Air Canada announced on Jan. 13 it has suspended flights on the Prince Rupert-Vancouver route as of Jan 17. (Photo by: Jerold Leblanc)
Cessation of flights to YPR will affect the municipal economy and global trade, P.R. Mayor said

Chamber of Commerce said it will aggressively pursue the resumption of flights to Prince Rupert

Air Canada has suspended flights to Prince Rupert Regional Airport due to COVID-19 mitigation, the airline announced on Jan. 13. (Photo:THE CANADIAN PRESS/Darryl Dyck)
YPR is not immune to plummeted air travel demands – 25 jobs lost

Prince Rupert Regional Airport flight cancellation will levee significant hardship - Rick Leach

Health Minister Adrian Dix and provincial health officer Dr. Bonnie Henry head for the press theatre at the B.C. legislature for an update on COVID-19, Jan. 7, 2021. (B.C. government)
B.C.’s COVID-19 spread steady with 509 new cases Friday

Hospitalized and critical care cases decline, nine deaths

Seasonal influenza vaccine is administered starting each fall in B.C. and around the world. (Langley Advance Times)
After 30,000 tests, influenza virually nowhere to be found in B.C.

COVID-19 precautions have eliminated seasonal infection

Prime Minister Justin Trudeau listens to a question during a news conference outside Rideau cottage in Ottawa, Friday, January 8, 2021. THE CANADIAN PRESS/Adrian Wyld
Trudeau says Canada’s COVID vaccine plan on track despite Pfizer cutting back deliveries

Canadian officials say country will still likely receive four million doses by the end of March

Jobs Minister Ravi Kahlon shared a handwritten note his son received on Jan. 13, 2021. (Ravi Kahlon/Twitter)
Proud dad moment: B.C. minister’s son, 10, receives handwritten note for act of kindness

North Delta MLA took to Twitter to share a letter his son received from a new kid at school

Lilly and Poppy, two cats owned by Kalmar Cat Hotel ownder Donna Goodenough, both have cerebellAr hypoplasia, a genetic neurological condition that affects their ability to control their muscles and bones. Photo by Alistair Taylor – Campbell River Mirror
VIDEO: Wobbly Cats a riot of flailing legs and paws but bundles of love and joy to their owner

Woman urges others to not fear adopting cats with disabilities

Chief public health officer Dr. Theresa Tam provides an update on the COVID-19 pandemic in Ottawa on Friday, Jan. 8, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada’s top doctor says to avoid non-essential travel as B.C. explores legal options

Premier John Horgan says he is seeking legal advice on whether it can limit interprovincial travel

Martin Luther King Jr. addresses the crowd during the march on Washington, D.C., in August of 1963. Courtesy photo
Government reinforces importance of anti-racism act on Black Shirt Day

B.C. Ministers say education “a powerful tool” in the fight for equity and equality

Black Press media file
Port McNeill driver tells police he thought the pandemic meant no breathalyzers

Suspect facing criminal charges after breathalyzer readings in excess of 3.5 times the legal limit

Forestry companies in B.C. agree to abide by the cedar protocols based on traditional laws of the First Nation members of the Nanwakolas Council. (Photo courtesy, Nanwakolas Council)
Landmark deal sees B.C. forest firms treat big cedars like a First Nation would

Western Forest Products, Interfor among companies to adapt declaration drafted by Nanwakolas Council

Most Read