The Walt Disney Company and Twenty-First Century Fox, Inc. (21st Century Fox) today announced that they have entered into a definitive agreement for Disney to acquire 21st Century Fox, including the Twentieth Century Fox Film and Television studios, along with cable and international TV businesses, for approximately $52.4 billion in stock. This is a monumental change in the landscape of film and television worldwide and represents Disney’s biggest single acquisition.
In the modern era Disney has used acquisition to fuel its growth, bringing in Pixar in 2006 for $7.4 billion, Marvel Entertainment in 2009 for $4 billion, and Lucasfilm in 2012 for $4.06 billion. In a statement about the deal Disney described it as allowing them “to create more appealing content, build more direct relationships with consumers around the world and deliver a more compelling entertainment experience to consumers wherever and however they choose.”
FCC rules restrict Disney from purchasing 21st Century Fox outright as they are prohibited from owning two broadcast networks. This means that immediately prior to the acquisition, 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 deal is an all-stock purchase by Disney, which means that they will issue approximately 515 million new shares to 21st Century Fox shareholders, representing approximately a 25% stake in Disney. Disney will also assume approximately $13.7 billion of net debt of 21st Century Fox.
The move sees the number of major Hollywood studios reduced from 6 to 5. What this means for the general public in the short term is that Disney will now own Fox’s acclaimed film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000. This includes the franchises Avatar, Alien, X-Men, Fantastic Four and Deadpool. They also acquire the rights to Fox’s library of films which includes the original Star Wars films, and recent hits like The Grand Budapest Hotel, Hidden Figures, Gone Girl, The Shape of Water and The Martian.
On the TV side the move sees Disney take Twentieth Century Fox Television, FX Productions and Fox21, as well as FX Networks, National Geographic Partners, Fox Sports Regional Networks, Fox Networks Group International, Star India and Fox’s interests in Hulu, Sky plc, Tata Sky and Endemol Shine Group. TV properties that will move include The Americans, This Is Us, Modern Family, The Simpsons and The X-Files.
For many fans around the world the instant take-away has been the fact that the deal provides Disney with the opportunity to reunite the X-Men, Fantastic Four and Deadpool with the Marvel universe. Disney had also recently built a Pandora world, based on the Avatar franchise at Disney’s Animal Kingdom Park at Walt Disney World Resort
Closer the home the move means that Disney will become the majority shareholder in Sky. 21st Century Fox is currently attempting to purchase the remaining 61% of Sky, and hopes to complete the transaction before the sale to Disney is closed. Assuming 21st Century Fox completes its acquisition of Sky prior to closing of the transaction, The Walt Disney Company would assume full ownership of Sky, including the assumption of its outstanding debt, upon closing.
All of it is subsequent to passing anti-trust and competition regulations, but that is likely. The timeline for regulatory approval is being estimated at 12 to 18 months. The move will significantly increase Disney’s muscle in the entertainment industry, particularly in its planned move to become a competitor to Netflix and Amazon in the streaming video market.
What it will mean for the creation of new content is unknown, and it is a potential cause for concern. Based on figures from the last few years the combined Disney/Fox accounts for between 30% and 40% of the US theatrical market share. Disney has given a large degree of autonomy to Pixar, Marvel, and Lucasfilm so far, so hopefully that bodes well for the Fox properties.