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Disney to Buy Fox Studios, Some Cable Networks

Disney is buying a large part of the Murdoch family's 21st Century Fox Disney is buying a large part of the Murdoch family's 21st Century Fox | 

Compiled from Associated Press reports
December 14, 2017 11:28 AM

BURBANK, Calif. (AP) - Disney is buying a large part of the Murdoch family's 21st Century Fox in a $52.4 billion deal, including film and television studios, cable and international TV businesses as it tries to meet competition from technology companies in the entertainment business.

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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.

The entertainment business is going through big changes. Tech companies are building video divisions. Advertisers are following consumer attention to the internet. And Disney is launching new streaming services, which could be helped with the addition of the Fox assets.

Disney CEO Bob Iger says the deal is a chance to combine some of the world's "most iconic" entertainment franchises.

The deal is a strong sign that the home of Mickey Mouse is serious about an upcoming streaming service to compete with Netflix. 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.

In an audio webcast Thursday to discuss the deal, Iger said some of the Fox properties will fit with that offering, including National Geographic and additional Marvel productions.

The service is driven by changes in how viewers watch TV and movies. While Disney has benefited from years of selling packaged channels such as ESPN through cable and satellite TV distributors, many viewers are ditching traditional TV and watching online instead. A streaming service lets Disney reach those viewers directly.

During the webcast, Iger said, "Creating a direct (to) consumer relationship is vital to the future of our media business and it is our highest priority."

Analysts say the deal will put Disney in a better position to compete with the likes of Netflix and Amazon.

Paolo Pescatore of CCS Insight says that "even a giant like Disney has not been immune" to changes in how consumers watch TV shows and movies. The deal, he says, will give Disney greater control of all aspects of content, from creation to distribution. That would lead to greater sources of revenue.

Daniel Ives, head of technology research at GBH Insights, calls the announcement a "home run deal" for Disney, one that will give the company and its upcoming streaming service "a clear runway to gain market and mind share" from Netflix and others.

Rupert Murdoch describes the move as a return to the company's lean and aggressive roots.

Murdoch, calling himself a "newsman with a competitive spirit," says Fox is "probably the strongest brand in all of television" and hasn't been hurt by losing some of its stars. He says the new company will be centered on live news and sports brands and the strength of the Fox network.

He says, "I know a lot of you are wondering, 'Why did the Murdochs come to such a momentous decision?' Are we retreating? Absolutely not. We are pivoting at a pivotal moment."

Disney CEO Robert Iger says he'll work with Fox CEO James Murdoch on integrating the two companies, but Iger doesn't know what Murdoch's role will be over the long term. Iger will remain in the roles if Disney Chairman and CEO until at least 2021 as part of the deal.


Credits

Compiled from Associated Press reports

Copyright 2017 The Associated Press. All rights reserved.

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