The Walt Disney Company is set to acquire 21st Century Fox in a landmark $52.4bn all-stock deal. Disney will take ownership of the majority of Fox assets including the film studio 20th Century Fox and its subsidiaries, Fox Networks Group (though not its flagship US broadcasting network), Fox Regional Sports Networks, Sky, National Geographic, and most of the company’s back catalogue.
This merger was announced on 14 December, with first news of negotiations between the two conglomerates reported on 6 November, although talks were thought to have cooled. For each Fox share sold, 21st Century Fox shareholders will receive 0.2754 Disney shares at a value of $28 a share, or roughly 25 per cent of Disney. The deal is not expected to be finalised for another 18 months, as regulators in the US Department of Justice Antitrust Division review the merger. While expected to go through, it is by no means smooth sailing: 20th Century Fox are continuing to operate as normal and develop film projects independent of Disney, while the DoJ has sued to block a similar merger between telecoms giant AT&T and Time Warner (the parent company of film studio Warner Bros. Pictures).
While this deal initially pleased many fans, excited that Disney will finally own the rights to Star Wars: A New Hope and release a full collection of the saga, or that Marvel Studios can now finally introduce the X-Men and Fantastic Four into their cinematic universe, it throws up a range of industry monopoly issues. Despite Rupert Murdoch’s reputation for building his empire, a sale of Fox was looking increasingly likely, given the weak performance of its entertainment divisions and $13.7bn in debt, which Disney will take on under the deal. Fox has already fallen foul of monopoly concerns, having been halted from acquiring the remaining shares in Sky by UK government regulators due to worries over competition.
Disney will now have a hugely dominant share of the film market (it was already the market leader), and the number of major studios who will potentially fund a project will be reduced from six to five, making it harder for creatives and producers to obtain funding Matt Goldberg of trade press website Collider also reported that the price of the merger was “too high for consumers”, noting the dangers of increased corporate consolidation and warning that risky concepts will no longer be produced due to Disney’s reliance on known franchises.
Disney is approaching a monopoly on the industry, with two entire studios (which will also put jobs at risk, as the mouse house expects to save $2bn due to merging overlapping assets); an unprecedented number of television channels; and could soon dominate the streaming industry, putting Fox’s back catalogue to use for its new streaming service. Corporate consolidation is dominating the industry at present, with CBS and Viacom in merger talks and Deadline reporting that Amazon and Verizon are “sniffing around” Lionsgate for acquisition.
Disney isn’t acquiring the entire company – Murdoch is spinning off the remaining assets including flagship network Fox (largely due to FCC rules preventing a merger between any of the majors) into a new company in an effort to concentrate on the profitable parts of the business, with projected revenues of $10bn. In addition to this Disney has also agreed to pay Fox a $2.5bn breakup fee if the deal is rejected by federal regulators. While the giants’ merger may seem promising for fans and shareholders, it has the potential to harm the industry through monopolisation, to the detriment of creators.