Disney completes $70B acquisition of Fox assets, reaps 40% of movie industry
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.
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.
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.
Comments
Since the announcement is right around the corner I suspect Iger already is aware of Apple's video strategy.
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.
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.
Agreed, "entertainment" is part of the human condition. Even prisoners get books. With absolutely no entertainment in your life bad things happen.
I'd rather watch that than any of the crap Disney puts out!