The Walt Disney Company, a multinational media and entertainment conglomerate agreed to acquire assets worth $66.1 Bn from its rival, Rupert Murdoch’s 21st Century Fox.
Walt Disney Co is a diversified global entertainment company with operations in four business segments: Media Networks (cable programming services under the brands ABC, Disney and Freeform), Parks and Resorts (family travel and leisure experience providers – Disneyland, Walt Disney World and Shanghai Disney resort), Studio Entertainment (Walt Disney Studios and Pixar), and Consumer Products & Interactive Media under the Disney brand.
Under the deal terms, Disney would acquire 21st Century Fox’s film and television studio 20th Century Fox, Fox-owned cable networks (including National Geographic and FX Networks & Production), and the company’s stakes in international networks like Star TV and Sky (in which Fox is planning to acquire full ownership before the acquisition is complete).
Disney will not acquire the Fox News division, which includes Fox News and Fox Business, the Fox Sports channel or the Fox broadcast network. With this deal, Fox would dispose of its entertainment divisions which the company perceives as deadweight and would focus on more profitable segments – news and sports.
Disney has been struggling to support its TV business as cancellation of cable subscriptions has been pressuring revenues from the sports channel ESPN – its biggest network. The acquisition would help Disney significantly reduce its reliance on traditional television: along with 21st Century Fox’s production companies and distribution networks, Disney is also acquiring Fox’s portfolio of intellectual property including three of the top five highest-earning films of all time – Star Wars, Scorsese’s Avatar and Marvel’s The Avengers – and will also take ownership of the extremely popular TV shows The Simpsons, How I Met Your Mother and 22 of Fox’s regional sports networks that own rights to broadcast live professional basketball, baseball and hockey.
Upon completion of the transaction, Disney, which plans to open its own streaming services by 2019, will also gain a majority control of Hulu, an online video streaming platform, that would allow it to compete with Netflix, Amazon, Apple, Google and Facebook in the fast-growing online video industry.
The transaction is expected to result in cost savings of at least $2 Bn for the combined business. The shareholders of 21st Century Fox will receive 0.2745 Disney share for each 21st Century Fox’s share, ending up owning about a quarter of the combined entity. The deal is valued at $66.1 Bn, including $13.7 Bn net debt.
The deal is subject to antitrust approval and is expected to complete in 12 to 18 months. Robert Iger agreed to extend his contract and remain Chairman and CEO of Walt Disney Company until the end of 2021 when integration is expected to be complete.
