Rupert Murdoch’s media empire, Twenty-First Century Fox, agreed Thursday to sell its entertainment business to The Walt Disney Company for $52.4 billion (€44.3 billion) in stock. In addition, Disney will assume $13.7 billion of Fox debt.
The blockbuster transaction means Disney will acquire the vaunted Fox Hollywood film and television studios, cable entertainment networks and international TV businesses, bringing popular franchises like “Avatar” and “The Simpsons” into the Mouse House, on top of the company’s previous purchases, including Pixar Animation Studios, Marvel Entertainment and “Star Wars” producer Lucasfilm.
Disney’s chief executive Robert Iger, who is expected to stay on as CEO through 2021, described the acquisition as a “stellar collection of businesses.”
“We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building,” Iger said, adding that the deal would “significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings.”
Digital media competition intensifying
The new pipeline of shows and movies will help Disney battle technology companies spending billions of dollars on programming shown online that is siphoning audiences away from traditional TV networks.
Disney has been struggling to bolster its TV business as cancellation of cable subscriptions is pressuring its biggest network, sports channel ESPN.
The company plans to launch its own streaming service in 2019 aimed at competing against Netflix and Amazon — a calculated gamble that it can generate more profit in the long run from its own subscription service rather than renting out movies to its digital rivals.
Moreover, the transaction also gives Disney a controlling interest in Hulu, another popular streaming service.
But analysts believe the deal could face considerable scrutiny by antitrust regulators because of the tie-up between two of the largest film and television groups. In an antitrust filing by the US Justice Department recently, regulators are already challenging another major media deal, between AT&T and Time Warner.
The ‘new’ Fox
For the Fox media empire, the sale means a vastly reduced portfolio of assets, leaving 86-year-old tycoon, Rupert Murdoch, and his two sons with a more tightly focused group.
Nevertheless, 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.”
Immediately before the acquisition, Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, its sports channels FS1, FS2 and the Big Ten Network, into a newly listed company that it will spin off to its shareholders.
Murdoch said his new “growth company” would center on live news and sports brands and the strength of the Fox network, adding that Fox was not retreating, rather “pivoting at a pivotal moment.”
Read more: Media mogul Murdoch adds Sky to his empire
Rupert Murdoch and his son, Lachlan Murdoch, will continue to run the remaining Fox assets, which will include the company’s studio production facility in Los Angeles, which is not part of the Disney deal.
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uhe/jd (Reuters, dpa, AFP)
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