Disney agrees $52bn Fox deal

Bob Iger (left) and Rupert Murdoch

Disney has agreed to buy a number of 21st Century Fox assets, including its US cablenets and stakes in European pay TV operator Sky and production giant Endemol Shine Group, in a US$52.4bn deal.

The agreement comes six weeks after talks between the two US media conglomerates first emerged and follows interest in the business from NBCUniversal owner Comcast, which bowed out this week, and telco Verizon.

Disney will take over a cable operation that includes National Geographic, FX and FXX, as well as a 30% interest in Hulu, giving it a controlling stake in the US streamer.

Entertainment properties including X-Men, Avatar and The Simpsons will also join Disney’s portfolio, while Fox’s 50% stake in Endemol Shine, which is behind formats such as MasterChef and Big Brother and UK dramas Broadchurch and Peaky Blinders, is also included.

Prodcos in its stable include Tiger Aspect, Shine TV, Princess Productions and Kudos in the UK, True Entertainment and 51 Minds in the US, and WeiT Media in Russia.

It also operates sales arm Endemol Shine International, Endemol Shine Latino, an Australian division and Endemol Shine Nordics, amongst numerous other divisions.

In addition, Disney is set to acquire Fox’s international operations including pay TV operators Sky in Europe and Star and Tata Sky in India, as well as its film studio operations. The acquisition is expected to yield at least US$2bn in cost savings as the businesses combine.

“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 Disney chairman and CEO Robert Iger, who is now set to see through the deal after extending his contract with the company until 2021. He had been due to step down in 2019.

“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.”

“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,” added 21st Century Fox exec chairman Rupert Murdoch.

“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.”

The deal is likely to be subject to significant regulatory hurdles over competition concerns. It also comes as Rupert Murdoch-backed Fox is mired in UK regulatory scrutiny over its bid to acquire the remaining 61% of Sky it didn’t own, a deal that emerged earlier this year.

Fox will attempt to complete that takeover prior to its sale to Disney, the US-based companies said.

Disney’s arrangement does not entail a total purchase of 21st Century Fox. The new ‘Fox’ will include Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network (BTN). It will also include the company’s studio lot in Los Angeles and equity investment in Roku.

The deal will leave Fox, currently run by James Murdoch, with a highly focused news and sports media operation, although reports have suggested the CEO could be lined up to work at Disney.

James Murdoch

The Mouse House, meanwhile, has armed itself with an array of US- and international-focused operations as it prepares to take on players such as Google, Apple, Facebook, Amazon and Netflix with its forthcoming direct-to-consumer offerings.

Disney announced earlier this year it will pull its film content from Netflix in 2019 as it prepares to launch a rival international streaming service.

Sources close to the Fox deal have previously said they believe Disney’s clout in the changing TV consumption landscape would allow it to compete with the new digital players.

Many think Fox lacks the scale to do so, however, leading to what is seen as a refocusing of its energies, although this had previously been dismissed by the company’s executive chairman, Lachlan Murdoch.

How the deal will be viewed by regulators remains to be seen, although AT&T’s agreement to buy HBO’s owner, Time Warner, has stagnated as the telco attempts to settle concerns over competition. US president Donald Trump has been a vocal critic of the deal.