Disney completes $70B acquisition of Fox assets, reaps 40% of movie industry

Posted:
in General Discussion edited March 20
Disney has closed its $70 billion acquisition of assets from 21st Century Fox, giving the entertainment company control of a considerable amount of content and studios, control which could become a problem for Apple and streaming video providers in general.




Announced in July 2018 following a bidding war with Comcast, the acquisition of 21st Century Fox completed early on Wednesday morning. The purchase provides a considerable number of assets to Disney from the Rupert Murdoch-owned News Corp, largely consisting of entertainment-related items instead of news assets like Fox News and Fox Sports.

The acquisition covers Fox's film production businesses, creative television units, FX cable networks, international networks, and other interests. The news and sports elements of 21st Century Fox have been spun off to a separate entity called Fox Corporation.

"This is an extraordinary and historic moment for us-- one that will create significant long-term value for our company and our shareholders," said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. "Combining Disney's and 21st Century Fox's wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era."

Disney claims the acquisition will enable it to provide "more appealing high-quality content and entertainment options to meet growing consumer demand," as well as to expand its direct-to-consumer services. Among these are ESPN+ and the upcoming Disney+ streaming video service that will launch in late 2019.

Alongside ESPN+ and Disney+, Disney also increases its holdings in existing streaming service Hulu, combining Fox's ownership stake with its own to give it a sizable level of control over the firm.

The creation of such a large creative-based company has the potential to put a strain on the rest of the industry. Disney has already ended its distribution agreement with Netflix with a view to making its own streaming services the home for Disney-branded content, forcing Netflix into creating more original content to match the shortfall.

Feels like the first day of Pool. pic.twitter.com/QVy8fCxgqr

— Ryan Reynolds (@VancityReynolds)


Apple's own anticipated entry into the streaming video business is also likely to be affected by the completed acquisition. While Apple has invested significantly into original content production, acquiring more content may be problematic if Disney extends its exclusivity policy to other content producers it operates.

The sheer size of both the firm and its content library will also give Disney more leverage when in negotiations with Apple concerning its online stores, which could allow it to gain more favorable terms for movies and TV shows offered to consumers.

The far-reaching effects of the deal enter other areas, with industry advisors suggesting to Vanity Fair Disney will move from having a 26-percent share of the theatrical box office to between 35 and 40 percent of the market. For theaters, this will give more sway, and allow it to dictate terms to exhibitors, or else theater chains could find themselves unable to show popular blockbusters.

While Apple and Disney has had a close corporate relationship for many years, the deal could eventually see Disney CEO Bob Iger be asked to leave the Apple board if Disney uses its new-found strength to influence the iPhone maker unduly. There is already the suggestion a request to exit may be made if there are concerns Iger could learn about Apple's video strategy, though that has yet to take place.
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Comments

  • Reply 1 of 24
    gatorguygatorguy Posts: 20,283member
    "While Apple and Disney has had a close corporate relationship for many years, the deal could eventually see Disney CEO Bob Iger be asked to leave the Apple board if Disney uses its new-found strength to influence the iPhone maker unduly. There is already the suggestion a request to exit may be made if there are concerns Iger could learn about Apple's video strategy, though that has yet to take place."

    Since the announcement is right around the corner I suspect Iger already is aware of Apple's video strategy. :/
    beowulfschmidtSpamSandwich
  • Reply 2 of 24
    Don’t worry guys - Apple has car pool karaoke and Oprah.
    SpamSandwichdesignrCarnage
  • Reply 3 of 24
    ...here is a merger that is going to serve in everyone's best interest </s>
  • Reply 4 of 24
    gatorguy said:
    "While Apple and Disney has had a close corporate relationship for many years, the deal could eventually see Disney CEO Bob Iger be asked to leave the Apple board if Disney uses its new-found strength to influence the iPhone maker unduly. There is already the suggestion a request to exit may be made if there are concerns Iger could learn about Apple's video strategy, though that has yet to take place."

    Since the announcement is right around the corner I suspect Iger already is aware of Apple's video strategy. :/
    Walk around the Disney Parks and  all you see are phones. Hotel check in, fast pass reservations, payments, etc. Surprised Apple has not opened a flagship store at Disney World. LOL
  • Reply 5 of 24
    hexclockhexclock Posts: 546member
    Disney just added itself to “Warren’s List”. 
  • Reply 6 of 24
    Take a moment to check who Disney’s largest share holder is ;)
  • Reply 7 of 24
    gatorguygatorguy Posts: 20,283member
    Take a moment to check who Disney’s largest share holder is ;)
    Now with the closing it's the Murdochs.

    I'll assume you were referring to the former Ms. Steve Jobs, but she reduced her stake in Disney by half more than two years ago and was no longer Disney's single largest shareholder even before the Fox purchase gave that "honor" to the Murdochs. Of course she still has a boatload anyway, and at under 5% ownership the trust that actually controls those shares no longer needs to report sales and purchases of Disney stock to the SEC. 
    edited March 20 Soli
  • Reply 8 of 24
    SpamSandwichSpamSandwich Posts: 30,840member
    krreagan2 said:
    ...here is a merger that is going to serve in everyone's best interest </s>
    Here’s the thing about entertainment:  It’s a luxury item. No one needs it to survive in their daily life, but people often place more value on it than the really important things because of how it makes them feel.
    designrelectrosoft
  • Reply 9 of 24
    lkrupplkrupp Posts: 6,789member
    Take a moment to check who Disney’s largest share holder is ;)
    I have no doubt Apple and Disney have a friendly working relationship. 


    edited March 20
  • Reply 10 of 24
    rob55rob55 Posts: 1,254member
    krreagan2 said:
    ...here is a merger that is going to serve in everyone's best interest </s>
    Here’s the thing about entertainment:  It’s a luxury item. No one needs it to survive in their daily life, but people often place more value on it than the really important things because of how it makes them feel.
    Speak for yourself, I think many of us need a little escapism to get by in our daily lives.  ;)
  • Reply 11 of 24
    rob55rob55 Posts: 1,254member
    Just what we need, one company controlling 40% of the movie industry.
    StrangeDaysgilly33
  • Reply 12 of 24
    SpamSandwichSpamSandwich Posts: 30,840member
    rob55 said:
    krreagan2 said:
    ...here is a merger that is going to serve in everyone's best interest </s>
    Here’s the thing about entertainment:  It’s a luxury item. No one needs it to survive in their daily life, but people often place more value on it than the really important things because of how it makes them feel.
    Speak for yourself, I think many of us need a little escapism to get by in our daily lives.  ;)
    You just proved my point. :D
  • Reply 13 of 24
    SoliSoli Posts: 8,680member
    rob55 said:
    krreagan2 said:
    ...here is a merger that is going to serve in everyone's best interest </s>
    Here’s the thing about entertainment:  It’s a luxury item. No one needs it to survive in their daily life, but people often place more value on it than the really important things because of how it makes them feel.
    Speak for yourself, I think many of us need a little escapism to get by in our daily lives.  ;)
    You just proved my point. :D
    No, he didn't. Mental health is important to longterm survival, which includes your ability to function at optimal levels mentally and ward off physical illness. "Entertainment," as you put it, is just one way in which we facilitate this escapism/relaxation.
    gatorguyStrangeDaysMacPro
  • Reply 14 of 24
    zoetmbzoetmb Posts: 2,422member
    rob55 said:
    Just what we need, one company controlling 40% of the movie industry.
    Aside from attempts to withhold product from competitive streaming companies (which would probably lead to a restraint of trade lawsuit or the like), I don't see how it really makes much difference aside from how it affects employees of the merged company (probably up to a third of the backroom employees in administration, finance, accounting, facilities, HR, etc. will eventually lose their jobs), assuming that Disney doesn't start strong-arming theaters for a bigger cut of the box-office.  But they won't do that unless they're incredible stupid because it will kill the theaters and probably also trigger lawsuits and future government intervention.   AMC, the largest U.S. theater chain, lost $487 million in fiscal 2017, although they were slightly profitable with $110 million of net earnings in fiscal 2018.   

    The movie industry has been consolidating for decades and even in the heyday of Hollywood, there were only eight majors consisting of the "big 5": MGM, Paramount, Fox, WB and RKO; and the "little three": Universal, Columbia and UA.   Disney was tiny until Mary Poppins.   Although in 1939, the largest of the studios, MGM, had only a 22% share.   It had the same share 10 years later in 1949, but that was still before TV had much penetration.  

    In the 1960's, MCA bought Universal; Gulf + Western bought Paramount; Transamerica bought UA; WB merged with 7 Arts.  In 1981, MGM merged with UA.  And of course through the 80's and 90's, there were lots of ownership changes and other mergers.  

    And today, we still have the "big 5": Paramount (Viacom), Universal/Focus (Comcast), Columbia/Tri-Star (Sony), Warner (AT&T) and Disney/Fox/Lucasfilm/Marvel (Disney).   MGM/UA still theoretically exists, but doesn't release much.   But even before this latest merger, at least half of the films made are co-productions between studios, because no one wants to take the risk on such big budget productions.

    Movie attendance hit an all-time low in 1971, which is interesting considering that cable penetration and home video were not yet big factors.  HBO didn't start until November of 1972.  Betamax wasn't released in the U.S. until 1975 and VHS wasn't released in the U.S. until 1977.   


    edited March 20 gatorguy
  • Reply 15 of 24
    It took me a while to spot the seventh dwarf in the photo.
  • Reply 16 of 24
    StrangeDaysStrangeDays Posts: 7,096member
    Don’t worry guys - Apple has car pool karaoke and Oprah.
    Don't worry guys, Apple sucks up all the profit in the smartphone, tablet, PC, and now wearables markets. Disney has lousy hardware sales.
  • Reply 17 of 24
    StrangeDaysStrangeDays Posts: 7,096member

    Soli said:
    rob55 said:
    krreagan2 said:
    ...here is a merger that is going to serve in everyone's best interest </s>
    Here’s the thing about entertainment:  It’s a luxury item. No one needs it to survive in their daily life, but people often place more value on it than the really important things because of how it makes them feel.
    Speak for yourself, I think many of us need a little escapism to get by in our daily lives.  ;)
    You just proved my point. :D
    No, he didn't. Mental health is important to longterm survival, which includes your ability to function at optimal levels mentally and ward off physical illness. "Entertainment," as you put it, is just one way in which we facilitate this escapism/relaxation.
    Agreed, "entertainment" is part of the human condition. Even prisoners get books. With absolutely no entertainment in your life bad things happen.
  • Reply 18 of 24
    SoliSoli Posts: 8,680member
    Soli said:
    rob55 said:
    krreagan2 said:
    ...here is a merger that is going to serve in everyone's best interest </s>
    Here’s the thing about entertainment:  It’s a luxury item. No one needs it to survive in their daily life, but people often place more value on it than the really important things because of how it makes them feel.
    Speak for yourself, I think many of us need a little escapism to get by in our daily lives.  ;)
    You just proved my point. :D
    No, he didn't. Mental health is important to longterm survival, which includes your ability to function at optimal levels mentally and ward off physical illness. "Entertainment," as you put it, is just one way in which we facilitate this escapism/relaxation.
    Agreed, "entertainment" is part of the human condition. Even prisoners get books. With absolutely no entertainment in your life bad things happen.
    Speaking of prisoners, there's growing evidence that solitary confinement can cause repeatable damage.

  • Reply 19 of 24
    Don’t worry guys - Apple has car pool karaoke and Oprah.

    I'd rather watch that than any of the crap Disney puts out!
  • Reply 20 of 24
    MacProMacPro Posts: 18,142member
    gatorguy said:
    "While Apple and Disney has had a close corporate relationship for many years, the deal could eventually see Disney CEO Bob Iger be asked to leave the Apple board if Disney uses its new-found strength to influence the iPhone maker unduly. There is already the suggestion a request to exit may be made if there are concerns Iger could learn about Apple's video strategy, though that has yet to take place."

    Since the announcement is right around the corner I suspect Iger already is aware of Apple's video strategy. :/
    I'm sure he has known for a long time hence the Fox acquisition.  Reminds me of a similar advantage taking position held by Eric Shit.
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