In what is likely the largest media industry M&As of 2017, Disney has acquired 21st Century Fox for US$52 billion.
The deal sees Disney take control of 21st Century Fox’s film and TV studios, its cable TV networks and its international TV businesses, which include a 39% stake in Pay TV network Sky in Europe, a stake in Endemol Shine and its stake in streaming platform Hulu.
Prior to deal finalising, 21st Century Fox plans to complete its acquisition of the remaining 61% of Sky it doesn’t already own, which would mean Disney owns Sky.
It will also see Disney take control of its entertainment franchises including X-Men, Deadpool, Avatar, The Simpsons and National Geographic, as well as its portfolio of movies ad TV shows that include This Is Us, Modern Family and more.
The deal does not include the Fox Broadcasting network, Fox News or Fox Business Network, which have been spun off into a separate entity ahead of the sale.
In a statement Disney says the deal will allow it to “provide consumers around the world with more appealing content and entertainment options”.
It is also a play for Disney to build more direct relationships with audiences, “accelerate its use of innovative technologies” and offer people more choice in how they consume content.
Disney also takes on around US$13 billion of net debt from 21st Century Fox and the pair believe there will be around $2 billion in cost savings from efficiencies.
“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” said Robert A. Iger, chairman and chief executive officer of The Walt Disney Company. He will stay on in his role until 2021.
“We’re honoured and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”
Rupert Murdoch, executive chairman of 21st Century Fox, says: “We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry. Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”
Deadpool is now in the Disney portfolio
A New Fox
Ahead of the deal, 21st Century Fox is spinning out some of its business, which will become part of “new Fox” - a media entity dedicated to news and sports.
Those brands include Fox News, Fox Business, Fox Sports, Fox Broadcasting Company, Fox Television Stations Group, FS1 and FS2, Fox Deportes and Big Ten Network, as well as an stake in Roku.
Its sports networks have rights deals across the NFL, MLB, World Cup soccer and NASCAR. The business is expected to reach annual revenue of around US$10 billion and EBITDA of US$2.8 billion.
“The new Fox will draw upon the powerful live news and sports businesses of Fox, as well as the strength of our Broadcast Network," says Murdoch.
"It is born out of an important lesson I’ve learned in my long career in media: namely, content and news relevant to viewers will always be valuable. We are excited by the possibilities of the new Fox, which is already a leader many times over.
“As a result of the transformative transactions proposed today, we are paving the way for the new Fox, as well as a better Disney, to chart a course across a broad frontier of opportunity. We have always made a commitment to deliver more choices for customers; provide great storytelling, objective news, challenging opinion and compelling sports. Through today's announcements we are proud to recommit to that promise and enable our shareholders to benefit for years to come through ownership of two of the world's most iconic, relevant, and dynamic media companies. They will each continue to be leaders in creating the very best experiences for consumers.”
It's not clear how the deal will affect the local market, but both Disney and Fox have been contacted.
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