On December 14, 2017, The Walt Disney Company announced a definitive agreement to acquire 21st Century Fox for $52.4 billion in stock. Assets being assumed by the acquisition include the 20th Century Fox film and TV studios, Fox Television Group (along with cable channels such as FX), international networks, a 73% stake in National Geographic Partners, Indian television broadcaster Star India, a 30% stake in Hulu, and other key assets. 21st Century Fox will spin-off the Fox Broadcasting Company, Fox Television Stations, Fox News Channel, the Fox Business Network, FS1, FS2, Fox Deportes and the Big Ten Network into the new Fox Corporation. [1] [2]
The Walt Disney Company, commonly known as Walt Disney or simply Disney, is an American diversified multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios in Burbank, California.
Twenty-First Century Fox, Inc., doing business as 21st Century Fox (21CF), was an American multinational mass media corporation that was based in Midtown Manhattan, New York City. It was one of the two companies formed from the 2013 spin-off of the publishing assets of News Corporation, as founded by Rupert Murdoch in 1980.
Twentieth Century Fox Film Corporation is an American film studio that is a subsidiary of Walt Disney Studios, a division of The Walt Disney Company. The studio is located on its namesake studio lot in the Century City area of Los Angeles.
Comcast (parent company of NBCUniversal) made their own offer on June 13, 2018, with a $65 billion all cash proposal to acquire the Fox assets that Disney was set to purchase, touching off a major bidding war between the two companies. [3] A week later, Disney counterbid with a $71.3 billion offer. [4] Comcast officially ended its bidding war with Disney to acquire Fox on July 19, in order to focus on acquiring a controlling stake in Sky plc. [5] Disney and Fox shareholders approved the acquisition on July 27, 2018. [6] Fox Corporation completed its spinoff from 21st Century Fox on March 19, 2019, taking over the latter's trading in NASDAQ. Disney's acquisition of 21st Century Fox will be completed on March 20, 2019, 12:02 AM (EDT). [7]
Comcast Corporation is an American telecommunications conglomerate headquartered in Philadelphia, Pennsylvania. It is the second-largest broadcasting and cable television company in the world by revenue and the largest pay-TV company, the largest cable TV company and largest home Internet service provider in the United States, and the nation's third-largest home telephone service provider. Comcast services U.S. residential and commercial customers in 40 states and in the District of Columbia. As the owner of the international media company NBCUniversal since 2011, Comcast is a producer of feature films and television programs intended for theatrical exhibition and over-the-air and cable television broadcast, respectively.
NBCUniversal Media, LLC is an American worldwide mass media conglomerate owned by Comcast and headquartered at Rockefeller Plaza's Comcast Building in Midtown Manhattan, New York City. It is one of two successor companies to MCA Inc., the other being Vivendi through its subsidiary Universal Music Group.
Sky Limited is a British media and telecommunications conglomerate. Headquartered in London, it has operations in the United Kingdom, Ireland, Germany, Austria, Switzerland, Italy and Spain. Sky is Europe's largest media company and pay-TV broadcaster by revenue, with 23 million subscribers and more than 31,000 employees as of 2019. The company is primarily involved in satellite television and broadband services.
On November 6, 2017, CNBC reported that The Walt Disney Company was negotiating a deal with Rupert Murdoch to acquire 21st Century Fox's filmed entertainment, cable entertainment, and direct broadcast satellite divisions, including 20th Century Fox, FX Networks, and National Geographic Partners. The deal would reportedly exclude the Fox Broadcasting Company, 20th Century Fox's studio lot, Fox Television Stations, Fox News Group and Fox Sports, which would be spun off into a new independent company run by the Murdoch family. [8]
CNBC is an American pay television business news channel that is owned by NBCUniversal Broadcast, Cable, Sports and News, a division of NBCUniversal, with both being ultimately owned by Comcast. Headquartered in Englewood Cliffs, New Jersey, the network primarily carries business day coverage of U.S. and international financial markets; following the end of the business day and on non-trading days, CNBC primarily carries financial and business-themed documentaries and reality shows.
Keith Rupert Murdoch, is an Australian-born American media mogul.
FX is an American pay television channel owned by the Walt Disney Television unit of The Walt Disney Company through FX Networks, LLC. It is based in Los Angeles, California. Originally launched on June 1, 1994, the network's original programming aspires to the standards of premium cable channels such as HBO, Showtime, and Starz in regard to mature themes and content, high-quality writing, directing and acting, and sister channels such as FXX and FXM. FX also carries reruns of theatrical films and terrestrial-network sitcoms, and advertising-free content is available through the FX+ premium subscription service.
The deal would also include film rights to certain franchises owned by Fox, such as X-Men and Fantastic Four, and the distribution rights to Star Wars: Episode IV - A New Hope , which are not owned by Marvel Studios and Lucasfilm respectively after Disney acquired the two companies. Talks had stalled for the day without a deal being finalized, [9] [10] but it was reported on November 10 that the prospected deal had yet to be fully abandoned. [11]
The X-Men are a team of fictional superheroes appearing in American comic books published by Marvel Comics. Created by artist/co-writer Jack Kirby and writer Stan Lee, the characters first appeared in The X-Men #1 and formed one of the most recognizable and successful franchises of Marvel Comics, appearing in numerous books, television shows, films, and video games.
The Fantastic Four is a fictional superhero team appearing in American comic books published by Marvel Comics. The group debuted in The Fantastic Four #1, which helped to usher in a new level of realism in the medium. The Fantastic Four was the first superhero team created by artist/co-plotter Jack Kirby and editor/co-plotter Stan Lee, who developed a collaborative approach to creating comics with this title that they would use from then on.
Star Wars is a 1977 American epic space-opera film written and directed by George Lucas. It is the first film in the original Star Wars trilogy and the beginning of the Star Wars franchise. Starring Mark Hamill, Harrison Ford, Carrie Fisher, Peter Cushing, Alec Guinness, David Prowse, James Earl Jones, Anthony Daniels, Kenny Baker, and Peter Mayhew, the film focuses on the Rebel Alliance, led by Princess Leia (Fisher), and its attempt to destroy the Galactic Empire's space station, the Death Star.
On November 16, 2017, it was reported that Comcast (parent company of NBCUniversal), Verizon Communications, and Sony had also joined Disney in a bidding war for 21st Century Fox. [12] [13] During a recent shareholders meeting, 21st Century Fox Co-Chairman Lachlan Murdoch stated that Fox was not a "sub-scale" company "finding it difficult to leverage their positions in new and emerging video platforms", but had "the required scale to continue to both execute on our aggressive growth strategy and deliver significant increased returns to shareholders". [14]
Verizon Communications Inc. is an American multinational telecommunications conglomerate and a corporate component of the Dow Jones Industrial Average. The company is based at 1095 Avenue of the Americas in Midtown Manhattan, New York City, but is incorporated in Delaware.
Sony Corporation is a Japanese multinational conglomerate corporation headquartered in Kōnan, Minato, Tokyo. Its diversified business includes consumer and professional electronics, gaming, entertainment and financial services. The company owns the largest music entertainment business in the world, the largest video game console business and one of the largest video game publishing businesses, and is one of the leading manufacturers of electronic products for the consumer and professional markets, and a leading player in the film and television entertainment industry. Sony was ranked 97th on the 2018 Fortune Global 500 list.
Because Walt Disney owns the American Broadcasting Company (ABC) and 21st Century Fox owns the Fox Broadcasting Company, a full acquisition of Fox by Disney would be illegal under the Federal Communications Commission (FCC)'s rules prohibiting a merger between any of two of the four major broadcast networks. [15] [16]
The American Broadcasting Company (ABC) is an American commercial broadcast television network that is a flagship property of Walt Disney Television, a subsidiary of the Disney Media Networks division of The Walt Disney Company. The network is headquartered in Burbank, California on Riverside Drive, directly across the street from Walt Disney Studios and adjacent to the Roy E. Disney Animation Building, But the network's second corporate headquarters and News headquarters remains in New York City, New York at their broadcast center on 77 West 66th Street in Lincoln Square in Upper West Side Manhattan.
The Federal Communications Commission (FCC) is an independent agency of the United States government created by statute to regulate interstate communications by radio, television, wire, satellite, and cable. The FCC serves the public in the areas of broadband access, fair competition, radio frequency use, media responsibility, public safety, and homeland security.
On November 28, 2017, while mentioning a rumor that the rumored negotiations between Disney and Fox were progressing at a rapid pace, Mike Fleming Jr. of Deadline Hollywood commented that "given how Disney made the Marvel and Lucasfilm deals under the cone of silence, if this happens we'll probably only know it when it's announced. It is certainly being talked about today." [17]
Rumors of a nearing deal continued on December 5, 2017, with additional reports suggesting that the FSN regional sports networks would be included in the sale (assets that would likely be aligned with Disney's ESPN division). [18] [19] [20] [21]
On December 11, 2017, Comcast announced it was dropping its bid on the Fox assets. [22] On December 14, Disney and Fox confirmed a $52.4 billion deal to merge the two companies, pending approval from the United States Department of Justice Antitrust Division. [1] [23]
In February, CNBC reported that, despite the Disney–Fox deal, Comcast might take action to outbid Disney's $52.4 billion offer, once the AT&T–Time Warner merger went through. Despite this, Fox President Peter Rice stated he was content with the Disney offer and that the Fox assets were "a great fit for Disney." [24]
Early in March, the non-profit group Protect Democracy Project Inc. filed a lawsuit against the United States Department of Justice on the hopes to seek any records of communications between the two groups over Disney's pending acquisition of Fox. The lawsuit also sought "any related antitrust enforcement efforts by the DOJ, to find out whether the president or his administration is improperly interfering with the independence of the DOJ out of favoritism for a political ally." Donald Trump congratulated Murdoch for the Disney–Fox deal while attacking AT&T's acquisition of Time Warner, particularly over the ownership of CNN, which he frequently criticized due to alleged bias. [25]
On April 12, 2018, Rice revealed that the acquisition was expected to close by summer 2019. [26] Beginning in March 2018, a strategic reorganization of the Disney conglomerate saw the creation of two business segments, Disney Parks, Experiences and Products and Walt Disney Direct-to-Consumer and International. Parks & Consumer Products was primarily a merger of Parks & Resorts and Consumer Products & Interactive Media. While Direct-to-Consumer & International took over for Disney International and global sales, distribution and streaming units from Disney-ABC TV Group and Studios Entertainment plus Disney Digital Network. [27] Given that CEO Iger described it as “strategically positioning our businesses for the future”, the New York Times considered the reorganization done in expectation of the 21st Century Fox purchase. [28]
On May 7, it was reported that Comcast spoke to investment banks about topping Disney's offer to acquire Fox. [29] Shortly afterwards, Bob Iger stated he was willing to drop Sky plc from the deal to ensure the Fox acquisition. [30]
Several Fox investors said that they would be open to terminate the company's agreement with Disney if Comcast followed through on its plan to launch a rival all-cash bid for $60 billion. Murdoch's family trust controlled 39% of Fox due to shares it held with special voting rights. However, under the company's by-law, those special rights did not apply to a vote on the Disney/Fox deal when the Murdoch trust only controlled 17% of the vote, making it easier for other shareholders to defeat him, which was expected as early as next month. [31] Later that month, it was confirmed that Lachlan Murdoch, rather than James Murdoch, would take charge of the New Fox company. [32]
The following week, Comcast publicly announced it was looking into making an all-cash counter-offer for the Fox assets that Disney proposed to acquire. [33] Shortly after, it was reported that Disney was looking into making its own all-cash counter-offer for Fox assets if Comcast went through with their offer. [34]
The next day, Disney and Fox announced they had set their shareholder vote meetings for July 10, although both stated that Fox's meeting could be postponed if Comcast came through with their offer. [35]
On June 12, AT&T was given approval by District Judge Richard J. Leon to acquire Time Warner, easing concerns Comcast had regarding whether government regulators would block their bid for Fox. Consequently, the next day, Comcast mounted a bid of $65 billion for the 21st Century Fox assets that were set to be acquired by Disney. [36] [3]
On June 18, 2018, it was reported that Disney will add to its already existing $52 billion claim to contest Comcast's proposed counter-offer for the Fox assets. [37]
On June 20, 2018, Disney and Fox announced that they had amended their previous merger agreement, upping Disney's offer to $71.3 billion (a 10% premium over Comcast's $65 billion offer), while also offering shareholders the option of receiving cash instead of stock. [4] On June 21, 2018, Murdoch said in response to Disney's higher offer: "We are extremely proud of the businesses we have built at 21st Century Fox, and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry." That still does not prevent other companies from making a bid, as the deal was needed to be voted on by shareholders. [38]
Iger explained the reasoning behind the bid: "Direct-to-consumer distribution has actually become an even more compelling proposition in the six months since we announced the deal. There has just been not only a tremendous amount of development in that space, but clearly the consumer is voting—loudly." [39]
On June 27, 2018, the United States Department of Justice gave antitrust approval to Disney under the condition of selling Fox's 22 regional sports channels within 90 days of closing, to which the company has agreed. [40] The next day, Disney and Fox boards scheduled July 27, 2018 as the day shareholders vote on Fox's properties being sold to Disney. [41]
On July 9, 2018, a Fox shareholder filed a lawsuit to stop the acquisition from Disney citing the absence of financial projections for Hulu. [42] [43] On the same day, CNBC reported that Comcast was looking for companies that could take over Fox's Regional Sports Networks. This would've made Comcast's anti-trust problems regarding the takeover of Fox assets easier as Comcast was preparing to make a new all cash counter-offer before July 27, 2018. [44]
On July 12, 2018, the Department of Justice filed a notice of appeal with the D.C. Circuit to reverse the District Court's approval for AT&T acquisition of Time Warner (now WarnerMedia). Although analysts say that the chances of the DOJ win are small, they say it is the "final nail in the coffin for Comcast's Fox chase. This is a clear gift to Disney." [45] On the next day, CEO of AT&T Randall Stephenson gave an interview with CNBC, about Comcast's bid for Fox: "It probably can't help it. You're in a situation where two entities are bidding for an asset, and this kind of action can obviously influence the outcome of those actions." [46]
On July 13, 2018, Disney received the support of the Institutional Shareholder Services and Glass Lewis, the two most prominent proxy adviser firms in the world. Fox shareholders were recommended by the advisers as means to provide for Disney's future. [47]
On July 16, 2018, CNBC reported that Comcast was unlikely to continue its bidding war with Disney to acquire Fox. Instead, Comcast is likely to continue pursuing 61% stake of Sky. [48]
On July 19, 2018, Comcast officially announced that it was dropping its bid on the Fox assets in order to focus on its bid for Sky. The CEO of Comcast, Brian L. Roberts, said "I'd like to congratulate Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company." [49]
On July 25, 2018, TCI Fund Management, the second largest shareholder of 21st Century Fox, indicated that they voted to approve the Disney–Fox deal. [50] On July 27, 2018, Disney and Fox shareholders approved the merger between the two companies. The merger's completions should be in the first half of 2019. [6] On the same day, Bloomberg reported that out of all 15 nations yet to approve the deal, China could become the biggest threat to the merger since the trade war with USA resulted in the merger between Qualcomm and NXP not being realized. [51]
There were reports on August 9, 2018 that Viacom CEO Robert Bakish wants to license its TV ad targeting tech to the entire industry, starting with Fox. [52] On August 12, 2018, the Competition Commission of India approved the Disney–Fox deal. [53]
On September 17, 2018, the European Commission scheduled a merger review for October 19, which was later postponed to November 6. [54]
On October 5, 2018, Disney announced the commencement of exchange offers and consent solicitations for 21st Century Fox. [55] On October 8, 2018, Disney announced that 21st Century Fox's top television executives would join the company, including Peter Rice, Gary Knell, John Landgraf, and Dana Walden. Rice will serve as Chairman of Walt Disney Television and Co-Chair of Disney Media Networks, succeeding Ben Sherwood while Walden is to be named Chairman of Disney Television Studios and ABC Entertainment. [56]
On October 10, 2018, it was reported that the new, post-merger organizational structure of "New Fox" would be implemented by January 1, 2019, ahead of the closure of the Disney sale (which is still expected to occur during the first half of 2019). [57]
On October 15, 2018, Disney offered a list of concessions to the European Commission, which extended the review deadline to November 6. [58] The European Commission on November 6, 2018 cleared the sale, pursuant to the divestment of certain factual television networks in Europe owned by the Disney/Hearst joint venture A&E Networks, including Blaze, Crime & Investigation, History, H2, and Lifetime. Disney will continue to be a 50 percent owner of A&E everywhere outside of the European Economic Area. [59]
On October 18, 2018, Disney announced a new organizational structure for The Walt Disney Studios and the individual unit heads who would join the company, including Emma Watts, Elizabeth Gabler, Nancy Utley and Stephen Gilula. Watts who currently serves as Vice Chairman and President of production at 20th Century Fox. All Fox film units would report to Walt Disney Studios Chairman Alan Horn with Fox Family and Fox Animation reporting to Watts and Horn. [60]
On November 19, 2018, China's regulators approved the Disney–Fox deal, without any conditions. [61] After obtaining approval from Chinese regulators, Disney reported that it still needed to obtain regulatory approval from several other regulators, though the approvals from the United States, European Union, and China were considered the most important hurdles to clear. [62]
On December 3, 2018, Brazil's Administrative Council for Economic Defense (CADE) stated that the deal would concentrate the market of cable sports channels. CADE recommended remedial measures. [63]
On December 13, 2018, Disney announced a new organizational structure for its international operations and the individuals who would join the company, including Rebecca Campbell, Jan Koeoppen, Diego Lerner and Uday Shankar. Shankar who currently serves as Chairman and President Fox Networks Group Asia and Star India will lead Disney's Asian operations and will become the new Chairman of Disney India. [64]
By December 14, 2018, the merger was subjected to regulation in Mexico, where Disney/Fox would account for 27.8% of content distribution across all genres. [65] Disney would own 73% of all sports channels in Mexico. [66]
On January 7, 2019, the registration statement for "New Fox", under the name Fox Corporation, was filed with the U.S. Securities and Exchange Commission. [67]
On January 11, 2019, it was reported that the deal is expected to close by either February or March 2019. [68] However, on January 30, 2019, in a SEC filing by Disney, it was reported that the deal is expected to close by June 2019. [69]
On January 31, 2019, Mexico's Federal Commission of Economic Competition (COFECE) approved the Disney–Fox deal after Disney agreed to sell its stake in Walt Disney Studios Sony Pictures Releasing de México, a Mexican film distributor, to Sony Pictures Motion Picture Group. [70]
On February 5, 2019, during Disney's Q1 2019 earnings call, Bob Iger confirmed that Disney was still waiting on approval from the "last few remaining markets" to approve the Disney–Fox deal. [71]
Bob Iger met with Brazil's antitrust regulator CADE on February 12, 2019 to discuss the Disney–Fox deal. However, a decision on the deal still could not be reached. However, on February 20, 2019, Bloomberg confirmed that CADE will make its ruling on the Disney–Fox deal on February 27, 2019. [72] On February 21, 2019, Bloomberg reported that Disney will divest Fox Sports in Brazil and Mexico to get approval in these countries. The two countries are among the last major hurdles for the Disney–Fox deal. [73] On February 27, 2019, Brazil's antitrust agency CADE approved the merger with conditions requiring Disney to divest Fox Sports Brazil among other measures. The regulator said that they coordinated with regulators in Mexico and Chile in evaluating the transaction. Brazil's approval clears one of the final hurdles, allowing the deal to be completed in March. [74]
On March 4, 2019, The Walt Disney Company tweaked Robert Iger’s compensation package he would receive upon closing the Disney–Fox deal, removing $13.5 million in potential salary and incentive awards available for the chief executive after the company closes its acquisition of 21st Century Fox Inc. assets. [75]
On March 5, 2019, Disney announced that Craig Hunegs would lead the combined TV operations at Disney Television Studios once the Disney–Fox deal closes. Hunegs will be president of the division, with oversight of all operations, including ABC Studios, ABC Signature, 20th Century Fox Television and Fox 21 TV studios. He'll report to Dana Walden, currently chairman/CEO of Fox Television Group who will be chairman of Disney Television Studios and ABC Entertainment. [76]
On March 7, 2019, Bob Iger stated at an annual meeting that the Disney–Fox deal would be ready to close 'soon', and that following the acquisition, 20th Century Fox would still keep its name alongside Fox Searchlight, and the FX Networks. [77]
On March 11, 2019, Mexico's telecom regulator, Federal Telecommunications Institute (IFT) approved the deal under the condition that Disney and Fox agree to sell Fox Sports in the country within six months. They also had to keep the National Geographic brand separate from its A&E channels. This cleared the last major holdout on the deal. [78]
On March 12, 2019, Disney announced that it has set to close the Fox deal on March 20, 2019. [7]
On March 19, 2019, Fox Corporation officially became a standalone, publicly traded company, separate from 21st Century Fox, making Fox Corp the owner of the assets that were not acquired by Disney. The announcement also included appointment of the board of directors. [79] Also on March 19, 2019, 21st Century Fox officially completed distribution of shares ahead of the completion of the Disney deal on March 20th. [80]
Despite Disney passing antitrust approval from regulators in every country, critics of Disney's purchase expressed concern of a significant amount of antitrust concerns. The deal is a horizontal merger (i.e., in which a company buys up a corporation that produces the same goods and products) as opposed to a vertical merger (i.e., two companies that operate at separate stages of the production process for a specific finished product), much akin to the integrations of AT&T–Time Warner and Comcast–NBC Universal. As such, horizontal mergers are more disapproved than vertical mergers, as they affect a more tangible reduction in competition. [81] The Federal Trade Commission (FTC) states in its own website that "The greatest antitrust concern arises with proposed mergers between direct competitors (horizontal mergers)." [82]
As both Disney and Fox produce films and television series, the deal would reduce the number of major film studios in Hollywood from six to five. Some argued that the operation would still leave many competitors around since Disney may compete with Netflix in the online streaming market with Disney+ in equal conditions with its newly acquired properties. However, opponents countered that these arguments do not hold much weight due to Disney's powerful box office and stock market shares, its practices, and its purchase of Fox's many assets. [83]
Many journalists expressed concerns about Disney's purchase of 21st Century Fox and its effects on the industry in the long run. A film reporter stated that "They'll have more control over more things, so if they decide they don't like what you wrote and want to ban you from their screenings, eventually that will mean all of entertainment. For journalists and reporters trying to do their job, it is frightening to see the scope of one company expand in that way and know that your fate is kind of tied up with them." "We've seen a pattern in Disney's behavior. The more power they have, the more they wield it," one entertainment reporter said. A freelance critic and member of the New York Film Critics Circle said that most journalists were troubled by the idea of the Disney–Fox deal: [84]
As an example, on November 3, 2017, Disney banned the Los Angeles Times from attending press screenings of its films in retaliation for the paper's coverage of their political influence in Anaheim, California in September of that year. [85] On November 7, however, Disney reversed its decision, after receiving massive protests and condemnation from a number of major publications and writers including The New York Times , The Boston Globe critic Ty Burr, The Washington Post blogger Alyssa Rosenberg, A Wrinkle in Time director Ava DuVernay, the websites The A.V. Club and Flavorwire , and film critic organizations which threatened to disqualify Disney films from their year-end awards in retaliation, specifically, the National Society of Film Critics, Los Angeles Film Critics Association, New York Film Critics Circle, and Boston Society of Film Critics. [86] [87] [88] Jason Bailey, the editor of Flavorwire, thought the way Disney treated the Los Angeles Times was "absolutely chilling", fearing it would only grow more common after the merger: [86]
“ | The idea of a major, multinational conglomerate being that petty and vindictive and really engaging in an act of retribution against an outlet, and against reporters who had nothing to do with the thing that they were angry about, gave some insight into the length they were willing to go against anyone who didn't toe the Disney company line. It's very worrisome, and is more worrisome if they're in control of this much more of the entertainment industry. | ” |
One film writer stated that "I personally worry that a studio this big will need the press less and less. I don't think anything drastic will change immediately, but I think it is more important than ever for entertainment reporters to uphold journalistic values. We are not their PR arms, no matter how much they'd like us to be." Another film reporter said, "As a critic, I've had Disney tell me they don't want to invite me to [its] film because I didn't like the last one. It really scares me to watch them get even more power." [86]
Unlike most studios, Disney has a reputation for lofty terms and strict conditions being imposed upon theater owners on its films, such as Avengers: Age of Ultron and Star Wars: The Last Jedi . For the latter, Disney demanded a 65% cut of domestic ticket sales (rather than the minimum 55% to 60% cut) along with a four-week hold in each venue and face a 5% penalty to any theater owner who breaks any part of the contract, including taking the film offscreen. If the Disney–Fox deal had happened in late 2016, Disney's domestic box office in 2017 would have equaled $4.5 billion or 40% market share, a figure no major studio has ever hit. For many, the deal would give Disney the unprecedented market power to be abusive without end. [89] [85]
One distribution studio executive denounced the deal, saying that "If I was an independent mom-and-pop theater, I would just close down; there's no way to survive. With a 40% market share, how do you negotiate against that?" [89] John Roper, the general manager of the Phoenix Theatre in Fort Nelson, British Columbia, said that Disney/Fox had him worried about even stricter rules in the future, stating, "It's not good for any type of industry when a company grows that large. Disney holds all the cards, and we have to play by their rules. Smaller cinemas are just left in the dust." Roper decided not to screen Star Wars: The Last Jedi because of Disney's strict conditions of requiring the theater to run the film four weeks straight and play it four times a day (as opposed to other studios, who only require a minimum of two weeks for a film run and play it one time a day). Elkader Cinema in Elkader, Iowa, opted out the movie for the same reason, with owner Lee Akin stating that "I can't get the entire town in my auditorium in one week's time let alone four." [90]
In Brazil, Disney demanded a 52% cut of Coco 's domestic ticket sales (rather than the historical 50% cut) and some theaters (with exceptions including foreign chains, such as Cinemark Theatres and Cinépolis) boycotted the film. [91] Coco was shown in 618 screens, against 919 screens that showed Sony Pictures' Jumanji: Welcome to the Jungle . [92] [93]
Other commentators have noted that Disney is a big proponent of longer theatrical windows and could provide a bulwark for traditional theaters against the streaming services. One local theater owner stated that "I would welcome some larger players to compete against the streaming services which I think are the real companies to watch out for in the future". [94]
American Cable Association President and CEO Matthew M. Polka lambasted the deal and called on federal regulators to "fully investigate" the merger. He was concerned about his smaller subscription television constituents having to negotiate multichannel deals with a behemoth that combines Fox's regional sports networks with ESPN and its cadre of collegiate-conference-focused RSNs, as well as the majority stake in Hulu: [95] [96]
“ | The Disney-Fox marriage not only will create one of the world's largest entertainment conglomerates but will give the combined company control of critical video programming that can be bundled together to harm consumers in local and national markets. In particular, Disney-Fox will become the largest holder of key local and national sports programming rights. It also will gain control of more national cable programming networks, and a significant stake in Hulu – an increasingly popular online distribution service. These assets will be in addition to Disney's national broadcast network (ABC) and multiple owned and operated ABC television stations. Because the combined company post-transaction could leverage these programming assets to undermine competition to the detriment of consumers, federal agencies must fully investigate the proposed combination to ensure that it neither violates antitrust laws nor is inconsistent with the public interest. | ” |
Many European telecommunication companies also expressed concerns about the Disney–Fox deal, considering that Sky plc and Sky UK were included in the package, as it serves almost 23 million households across Britain, Ireland, Germany, Austria, and Italy. Disney's takeover of Sky would be greater than RTL Group, Mediaset, ITV, ProSiebenSat.1 Media, Viasat, and Vivendi combined, according to Eikon estimates, and could allow Sky to expand into new markets and bid more for sports rights and other content. Some felt that Disney-owned Sky UK would be most damaging to its pay-TV competitors since they have invested in content to cross-sell television with mobile services, in a bid to squeeze more out of customers. [97] A hedge fund with a small stake in Sky has complained that the Disney–Fox deal could cost minority shareholders in the UK satellite broadcaster a hefty premium unless UK regulators intervene. [98]
Dish Network CEO Erik Carlson said blockbuster mergers like the Disney–Fox deal could severely limit the number of content companies providing to their customers. Carlson said on CNBC's Squawk on the Street that "We really take the position that we think about the customer and the customer first." [99]
The Writers Guild of America West, the union that represents writers of films, television, and other media, wrote that: [100] [101]
“ | In the relentless drive to eliminate competition, big business has an insatiable appetite for consolidation. Disney and Fox have spent decades profiting from the oligopolistic control that the six major media conglomerates have exercised over the entertainment industry, often at the expense of the creators who power their television and film operations. Now, this proposed merger of direct competitors will make matters even worse by substantially increasing the market power of a combined Disney-Fox corporation. The antitrust concerns raised by this deal are obvious and significant. The Writers Guild of America West strongly opposes this merger and will work to ensure our nation's antitrust laws are enforced. | ” |
Tom Rothman, chairman of the Sony Pictures Motion Picture Group and former co-chairman of Fox Filmed Entertainment, said the Disney–Fox deal was a dangerous proposition: "Consolidation under giant corporate mandates rarely promotes creative risk-taking. And in the long run, it is always a challenge to compete against horizontal monopolistic power." [102] [103]
James Mangold, director of Fox's Marvel adaptations The Wolverine and its R-rated sequel Logan , expressed concerns that the deal might lead to the approval of a similar film that may have more limited appeal than a conventional Marvel blockbuster, thereby limiting the opportunities for certain filmmakers as well as the consumers. Mangold said that "If they're actually changing their mandate, if what they're supposed to do alters, that would be sad to me because it just means less movies." [104]
At the Critics' Choice Movie Awards on January 11, 2018, producer J. Miles Dale, who accepted the Critics' Choice Movie Award for Best Picture for The Shape of Water , urged Disney "not to mess" with 20th Century Fox's indie studio Fox Searchlight Pictures, saying, "they're making the kind of movies that we need to make, we want to make, and people need to see." [104]
Writer Marc Guggenheim, known for his work for the Arrowverse for The CW, said that "As a writer, I'm not a big fan of these big corporate consolidations. I don't think they're necessarily good for writers, directors, producers, and actors. I also, as an American, don't love these big corporate mergers. I don't think they're necessarily good for the country." [105]
The potential acquisition of Fox by Disney caused concern within the entertainment industry that smaller media companies, including Viacom, CBS Corporation, Lionsgate, and Metro-Goldwyn-Mayer, would need to consolidate or be sold in order to remain competitive. [106]
On February 13, 2018, television producer Ryan Murphy, a long-time collaborator of 20th Century Fox Television, signed a five-year $300 million agreement with Netflix, a move considered to be a big blow to Fox and Disney. Murphy cited the Disney–Fox deal as the main reason for departure, arguing that his freedom under Disney might be severely limited in creating new, risk-taking content. [107]
Jeff Bock of Exhibitor Relations expressed hope that the merger would force creativity in other studios like Paramount, which might focus on smaller-budget films knowing that it could not compete with Walt Disney (after the Fox acquisition) in making big-budget blockbusters. [94]
Viacom CEO Bob Bakish has stated that the Disney–Fox deal provides a "very real opportunity" to hire new executive and creative talent at Paramount and other studios amid the "dislocation associated with change of ownership" at Disney and Fox. Bakish also suggested that Viacom and other companies can provide new content for streaming services such as Netflix once Disney removes their content from the service in 2019. [108]
President Donald Trump praised both companies for the merger, believing it is best for American jobs. [109] However, not all politicians are pleased with the decision. U.S. Rep. David Cicilline from Rhode Island's 1st congressional district, the ranking Democrat on the House Antitrust Subcommittee, expressed concerns over the transaction. He said in a statement that "Disney's proposed purchase of 21st Century Fox threatens to put control of even more television, movie, and news content into the hands of a single media giant. If it's approved, this acquisition could allow Disney to limit what consumers can watch and increase their cable bills," he said. "Disney will gain more than 300 channels, 22 regional sports networks, control over Hulu, and a significant portion of Roku." [83] [110]
Richard Greenfield, the BTIG Research analyst, wrote that the combined Disney and Fox assets would have a 39% theatrical market share: [83]
“ | Disney is already using its box office muscle to bully movie domestic exhibitors, extracting financial terms far beyond their studio peers... Adding Fox, which controls portions of the Marvel universe ( X-Men , Deadpool ) and the Avatar franchise, would enable Disney to gain unprecedented market power. | ” |
In response to the Disney–Fox deal, Analyst Andy Hargreaves of KeyBanc Capital Markets Inc. downgraded Fox's stock from overweight to Sector Weight with no assigned price target. Hargreaves said that although the merger is positive for both companies, it comes with a high antitrust risk due to Disney's potential share of theatrical revenue, its share of domestic cable assets, its strong position in sports, and its power to already force preferential deals with cable, satellite, and theater owners. [111] [112] [113]
David Balto, an antitrust lawyer and former policy director at the FTC, said that the inclusion of regional sports networks would give Disney greater leverage with cable and satellite distributors: "Any increase in Disney sports programming will be extremely problematic and will get intense scrutiny". [100]
John Simpson of the activist group Consumer Watchdog said that the deal "would give far too much monopolistic power to Disney, which is known for cutthroat, hardball tactics", and "can only mean higher prices and less choice for consumers." [114]
Barton Crockett, a media analyst at B. Riley FBR, said that "Disney is becoming the Wal-Mart of Hollywood: huge and dominant. That's going to have a big influence up and down the supply chain." [115]
Ian Bezek, contributor to InvestorPlace, questioned the underlying rationale for the merger, asking why Disney needed to acquire Fox's film production and cable sports business for such a "high price", given Disney's already healthy positions in both businesses:
“ | Put another way, Disney is paying $66 billion, including the assumption of $13 billion in debt, to add more sports channels and film production to its already powerful place in both areas. Given the problems at ESPN, some would say this is doubling down on a struggling division. In any case, this deal significantly weakens the argument that Disney is a diversified powerhouse, as it will rely much more on just a couple revenue streams for the majority of its profits post-deal. [116] | ” |
Jonathan Barnett, law professor at the University of Southern California Gould School of Law states that when considering streaming services under the same markets as theaters, worries about Disney's control "would be substantially diminished". [94]
Included in the deal are the majority of 21st Century Fox's entertainment and international assets. [4] These include:
On November 14, 2018, it was revealed that a new independent company, which was tentatively called "New Fox", would be named Fox Corporation. [122] The company implemented its structure on January 1, 2019. [57] Its assets include Fox's broadcast, news and sports businesses. [2] They include:
Assets that were initially a part of the acquisition of Fox assets by Disney, but have since been planned to be sold off to third parties.
Fox Sports Networks (FSN), formerly known as Fox Sports Net, is the collective name for a group of regional sports channels in the United States. Formed in 1996 by News Corporation, the group was acquired by The Walt Disney Company in March 2019 following its acquisition of 21st Century Fox. Disney subsequently sold the networks to Sinclair Broadcast Group as part as an agreement with the U.S. Department of Justice where Disney had to sell the channels by June 18, 2019, 90 days after the completion of its acquisition.
A major film studio is a production and distribution company that releases a substantial number of films annually and consistently commands a significant share of box office revenue in a given market. In the American and international markets, the major film studios, often simply known as the majors, are commonly regarded as the five diversified media conglomerates whose various film production and distribution subsidiaries collectively command approximately 80–85% of U.S. box office revenue. The term may also be applied more specifically to the primary motion picture business subsidiary of each respective conglomerate.
The Walt Disney Studios is an American film studio, one of the four major businesses of The Walt Disney Company and the main component of its Studio Entertainment segment. The studio, one of the "Big Five" major film studios and best known for its multi-faceted film divisions, is based at the eponymous Walt Disney Studios in Burbank, California. Founded in 1923, it is the fourth-oldest among the major studios.
Hulu, LLC is an American entertainment company that provides over-the-top media services to customers in the United States, its territories and Japan. It is primarily oriented towards instant streaming of television series, carrying current and past episodes of many series from its owners' respective television networks and other content partners. Hulu is owned by Hulu, LLC, which itself is 60% owned by The Walt Disney Company not yet allocated following AT&T's sale of its stake.
Walt Disney Studios Motion Pictures is an American film distributor owned by The Walt Disney Company. It handles theatrical distribution, marketing and promotion for films produced and released by the Walt Disney Studios, including Walt Disney Pictures, Walt Disney Animation Studios, Pixar, Marvel Studios, Lucasfilm, 20th Century Fox, Fox Searchlight Pictures, and Blue Sky Studios. The company was originally established in 1953 as Buena Vista Film Distribution Company, Inc. It took on its current name in April 2007,
Twentieth Century Fox Animation is an animation subsidiary of Walt Disney Studios, a division of The Walt Disney Company. The studio is located in Century City, Los Angeles, and is tasked with producing feature-length animated films.
Walt Disney Television is a division of Disney Media Networks that oversees television assets owned and operated by The Walt Disney Company. It was formerly called Disney–ABC Television Group, until Disney's acquisition of 21st Century Fox assets on March 20, 2019. Assets in the group include the ABC network; cable networks: Freeform, Disney Channels, FX and National Geographic channels; Disney Television Studios: ABC Studios, 20th Century Fox Television and Fox 21 Television Studios; ABC News; and ABC Owned Television Stations. The division also manages Disney's 50% equity stake in A&E Networks. Along with ESPN, Walt Disney Television are the two primary divisions of Disney Media Networks. The Walt Disney Television chairman and president is Peter Rice, who also serves as co-chairman of Disney Media Networks.
Twentieth Century Fox Television is a television-production studio owned by Walt Disney Television, a division of The Walt Disney Company. 20th Television is the syndication and distribution arm of 20th Century Fox Television.
Fox Networks Group (FNG) refer to the following two business units that were previously a part of 21st Century Fox. Both units were affected by The Walt Disney Company's acquisition of their former parent.
The Walt Disney Company (India) Private Limited is an Indian subsidiary of Asia Pacific region of Walt Disney Direct-to-Consumer & International and is based in Mumbai, Maharashtra.
Disney+ is an upcoming over-the-top subscription video on-demand service owned and operated by Walt Disney Direct-to-Consumer & International. It is set to launch in the United States on November 12, 2019. It will be focused on film and television content from Walt Disney Studios and Walt Disney Television. Original films and television series based on new and existing properties are also planned, including content from Disney, Pixar, Marvel, Lucasfilm, National Geographic, and 20th Century Fox.
The Fox Corporation is an American television broadcasting company headquartered in Midtown Manhattan, New York City. It was formed from the 2019 acquisition of 21st Century Fox by the Walt Disney Company. Fox Corp. was spun off from 21st Century Fox and its stock began trading on March 19, 2019. It is owned by the Murdoch family via a family trust with 39% interest; Rupert Murdoch is co-executive chairman, while his son Lachlan Murdoch is chairman and CEO.
Fox Entertainment Group was an American network of studios specializing in filmed entertainment owned by 21st Century Fox. Following the acquisition of 21st Century Fox by Disney, the group's assets were folded into various Disney units. The film studios 20th Century Fox, Fox Searchlight Pictures and Blue Sky Studios were transferred to Walt Disney Studios, whilst Fox Star Studios transferred to Walt Disney Direct-to-Consumer and International.
(A)mong the assets that will remain behind as part of Fox Corp.: MyNetworkTV.