After a 15-month rollercoaster ride that saw a deal reached, challenged and reached again, the Walt Disney Co. closed its $71.3 billion purchase of certain 21st Century Fox assets, creating an even more powerful content juggernaut in Disney, while a smaller Fox concentrates on live news and sports.
Disney had first agreed to purchase the Fox assets -- including cable channels FX, FXX and National Geographic, the 20th Century Fox movie and TV production studios and Fox’s 30% interest in online video pioneer Hulu - for $52.4 billion in December 2017. But that deal was challenged by Comcast just a few months later in June, with the cable and content giant lobbing in a $65 billion unsolicited offer for the businesses. After a month-long battle of bidding one-upmanship, Comcast dropped out of the battle in July, after Disney increased its price to $71.3 billion.
“This is an extraordinary and historic moment for us—one that will create significant long-term value for our company and our shareholders,” Disney chairman and CEO Bob Iger said in a press release. “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.”
With the deal closed, Disney will face the challenge of integrating the Fox assets into its vast content stable as it readies to launch its second direct-to-consumer streaming service later this year -- Disney +.
That could mean layoffs -- some analysts have predicted that more than 3,000 people could lose their jobs at the beefier Disney due to redundancies.
Fox added new members to its board of directors -- including former Speaker of the House Paul Ryan.
So far investors didn’t react much to the close -- it had been expected for months -- with Disney stock up slightly (it was trading at $110.40, up 40 cents each or 0.8% early March 20) and Fox was down a bit. Fox, which will keep its cable news operations -- Fox News Channel and Fox Business -- its broadcast network, 28 TV stations and its sports channels, fell a bit (it was priced at $39.47 each early on March 20, down 88 cents each or 2.2%.
Fox is expected to be active in beefing up its TV station portfolio -- although it sat out two big station auctions for Cox Media and Nexstar stations. The focus on live sports and news also is expected to drive advertising revenue gains in the future.
For Disney, the Fox asset buy solidifies its new strategy in the ever-changing media landscape. With content from the Pixar, Star Wars and Marvel universes, and sports from its broadcast and ESPN networks, adding Fox content ranging from the X-Men to The Simpsons will only further cement its bonds to young male viewers. Disney is expected to unveil its overall strategy, including more detailed information on Disney +, at a scheduled Investor Day meeting on April 11.
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