cloudy
Monday July 16th, 2018 12:26PM

Disney buying large part of 21st Century Fox in $52.4B deal

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — Disney is buying the Murdoch family's Fox movie and television studios and some cable and international TV businesses for about $52.4 billion, as the home of Mickey Mouse tries to meet competition from technology companies in the entertainment business.

Disney's all-stock deal for 21st Century Fox gives it the studios that produce the Avatar movies, "The Simpsons" and "Modern Family," though Murdoch will form a new company to keep the U.S. television networks, including Fox News Channel, Fox Business Network and Fox Broadcasting. "The Simpsons" will continue to air on Murdoch's Fox stations. The deal also brings Marvel characters such as X-Men and The Avengers under one roof — Disney's.

Murdoch's new company will get national rights to Major League Baseball, the NFL, NASCAR and college sports through the Fox TV network and cable networks FS1, FS2 and Big Ten Network. Disney is getting Fox's regional sports networks, including the Yes Network showing the New York Yankees.

In owning these properties, Disney will be in a better position to compete with the likes of Netflix when it launches ESPN- and Disney branded streaming services in the coming years.

That Rupert Murdoch and his sons were willing to sell off much of the business that has been built up over decades came as a shock to the entertainment industry.

Murdoch, who built a global media and entertainment empire out of an inheritance from his father in Australia, said what remains of his family's business will be able to focus on American news and sports. During a call with investors Thursday, Murdoch and his sons described the move as a return to the company's lean and aggressive roots.

BATTLING NETFLIX

The deal — announced Thursday on the eve of a major "Star Wars" movie release from Disney — comes as the entertainment business goes through big changes. TV doesn't have a monopoly on home entertainment anymore. There's Netflix, which is spending up to $8 billion on programming next year. Amazon is building its own library, having splashed out on global TV rights to "Lord of the Rings." Facebook, Google and Apple are also investing in video.

As consumers spend more time online, TV's share of U.S. ad spending is shrinking. Advertisers are following consumer attention to the internet, where Google and Facebook win the vast majority of advertisers' dollars.

To combat this trend, Disney is launching its own streaming services. It could beef them up with some of the assets it's acquiring from Fox, making them exclusive to its services and sharpening its ability to compete with Netflix for consumer dollars.

Disney CEO Robert Iger said many Fox properties will fit with the new service, including National Geographic and additional Marvel productions. In some cases, though, Disney will have to wait for existing Fox deals to expire. Fox movies are exclusive to HBO through 2022, for example.

"We've been talking about cord cutting for the better part of a decade. But now it's real," USC Annenberg communications professor Chris Smith said. The media companies have to compete with the internet giants for consumers' attention — and the younger generations pay more attention to YouTube, Facebook and other "platforms" than traditional TV, Smith said.

THE MECHANICS

Iger will continue as chairman and CEO of The Walt Disney Co. through the end of 2021. Disney said Thursday that it anticipates at least $2 billion in efficiencies and other cost savings from the acquisition. Both companies' boards have approved the deal. It still needs approval from Disney and 21st Century Fox shareholders.

Before the buyout, 21st Century Fox will separate the businesses it's keeping into a newly listed company that will be spun off to its shareholders. It will also include the company's studio lot in Los Angeles and equity investment in Roku.

Fox is also selling to Disney its substantial overseas operations. Disney will get at least a 39 percent stake in European satellite-TV and broadcaster Sky. Fox is hoping to acquire the remainder of Sky before the deal closes, so that it could give Disney full control after the sale. Disney is also acquiring Star India, a major media company with dozens of sports and entertainment channels.

Disney will also win majority control of Hulu, both its live-TV service and the older service with a big library of TV shows.

Not everyone thinks this is a good bet by Disney, though. Rich Greenfield, a longtime Disney critic, thinks the deal is a bad idea that ties Disney to older TV-distribution systems — cable and satellite TV — rather than helping it look toward the future.

He also notes that regulators may not like the idea of combining two major movie studios. The Justice Department surprised many in the industry and on Wall Street when it sued to block another media megamerger, AT&T's acquisition of Time Warner, in November.

MURDOCH FAMILY TAKES A BOW

Murdoch built his empire by buying a string of papers in Australia, the U.K. and the U.S., building an influential platform for his views. He expanded into TV and movies, launching the Fox network and Fox News and changing the face of American news and entertainment.

"Rupert has spent many, many years assembling the components of his empire," said NYU business professor Samuel Craig, who specializes in the entertainment industry.

Rupert Murdoch has ostensibly already handed the reins over to a new generation at Fox. His son James is CEO, while his other son, Lachlan, like Rupert, has the title of executive chairman.

The Murdoch empire has already been divided. After a phone-hacking newspaper scandal in the U.K., News Corp. was split off into a separate company for the publishing and newspaper businesses, which include the New York Post, The Wall Street Journal, The Sun and The Times in the U.K., and book publisher HarperCollins. Now, Fox is slimming down, with the bulk of the company going to Disney.

"The Murdochs realize they don't have the same kind of leverage Disney has, the same kind of brand power," Smith said.

It would be harder to launch a Fox-branded streaming service that attracts lots of the new generation of consumers, for example. Smith said that makes it a great time to sell off the entertainment business.

Fox will be left with the live events, news and sports that are key parts of the traditional TV bundle. There is speculation that the Murdochs would want to recombine the slimmed-down Fox with News Corp., though Murdoch told investors Thursday, "We haven't thought about combining with News Corp."

MIGHTIER MOUSE

The Disney-branded service, expected in 2019, will have classic and upcoming movies from the studio, shows from Disney Channel, and the "Star Wars" and Marvel movies.

Disney could continue to add movies and TV shows from Fox's library to its services, making them more attractive compared with Netflix's offerings. The combined libraries of the Disney and Fox movie and TV studios could have more titles than Netflix, Barclays analyst Kannan Venkateshwar said. Buying Fox's FX networks will add edgy TV shows that complement Disney's long list of kid-friendly series and films, he said.

Disney also plans an ESPN Plus service for next year. It isn't a duplicate of the ESPN TV network, but it will stream tennis matches along with major-league baseball, hockey and soccer games, as well as college sports. It might be able to add more sports through Fox's regional sports networks — cable channels that show popular sports in the viewer's region.

Disney also owns Marvel, but not all the Marvel characters. It's made movies starring Thor, Doctor Strange and Captain America and the Avengers crew. But the X-Men are at Fox. Bringing them home under one roof could mean movies with more of the characters together. Sony will still have rights to Marvel's Spider-Man, though a deal with Disney lets Spider-Man appear in Disney movies.

___

AP Business Writer Michelle Chapman in West Orange, New Jersey, and AP Technology Writer Matt O'Brien in Providence, Rhode Island, contributed to this report.

  • Associated Categories: Associated Press (AP), AP Sports, AP Online Baseball , AP Online Football, AP National News, AP Online National News, Top General short headlines, College Sports, AP World News, AP Entertainment, AP Online TV News, AP Business, AP Business - Corporate News, AP Technology News, AP Sports - College Baseball, AP Sports - Major League Baseball, AP Sports - NFL
© Copyright 2018 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
New Polish PM debuts at summit, seeks better ties with EU
A new Polish prime minister makes his foreign debut at a European Union summit Thursday, a first test if the Western-educated former banker can bridge a deepening rift between his right-wing government and Brussels
7:11AM ( 27 minutes ago )
Putin: US hurts itself with "invented" Trump collusion case
President Vladimir Putin says the allegations of collusion between U.S. President Donald Trump and Russia have been "invented" by Trump's political foes to undermine his legitimacy
7:02AM ( 35 minutes ago )
Italy OKs living wills amid long-running euthanasia debate
Italy's Senate has passed a law allowing Italians to write living wills and refuse artificial nutrition and hydration, the latest step in Catholic Italy's long-running debate over euthanasia and when it's OK to pull the plug
7:00AM ( 38 minutes ago )
Associated Press (AP)
Royals join bereaved families in London tower fire memorial
Britain's royals have joined survivors and families of those who perished in London's Grenfell Tower fire for a memorial service to remember the 71 people killed in the June blaze
6:31AM ( 1 hour ago )
Brexit talks due to get green light to move on to trade
The European Union's leaders are due to say Friday that the Brexit talks with Britain can move on to the next phase to include the key topic of trade
6:28AM ( 1 hour ago )
Aid group: At least 6,700 Rohingya killed in Myanmar
International aid group Doctors Without Borders says its field survey has found at least 6,700 Rohingya Muslims were killed between August and September in a crackdown by Myanmar's security forces
5:52AM ( 1 hour ago )
AP National News
Bannon, undeterred, under siege from GOP after Alabama loss
Steve Bannon has come under fire from fellow Republicans, shows no signs of abandoning his guerrilla war against the GOP establishment.
3:53AM ( 3 hours ago )
Ample tax cuts for business, wealthy in new GOP tax accord
Generous tax cuts for corporations and the wealthiest Americans would be delivered in a sweeping overhaul of the tax laws, under a new agreement crafted by Republicans in Congress.
3:47AM ( 3 hours ago )
Lines cut around a third of still-powerful California blaze
Fire lines have been established around nearly a third of one of the largest wildfires in California history, but the blaze is still raging in some places, conditions are still fire-prone, and danger remains
3:30AM ( 4 hours ago )
AP Online National News
Omarosa exits the White House with a dose of drama
The White House says Omarosa Manigault Newman _ one of President Donald Trump's most prominent African-American supporters _ plans to leave the administration next month.
3:55AM ( 3 hours ago )
Firefighters wary despite gains against California fire
The fifth-largest wildfire in California history is now 30 percent contained but it still threatens coastal communities and gusty Santa Ana winds that drove the flames continue
11:18PM ( 8 hours ago )
Former 'Apprentice' contestant Omarosa leaving White House
The White House says Omarosa Manigault Newman _ one of President Donald Trump's most prominent African-American supporters _ plans to leave the administration next month.
10:31PM ( 9 hours ago )
AP Entertainment
Former "Apprentice" figure Omarosa leaving White House staff
The White House says Omarosa Manigault Newman _ one of President Donald Trump's most prominent African-American supporters _ plans to leave the administration next month
5:18PM ( 14 hours ago )
Show about viral video judge gets national syndication deal
A TV show featuring an 81-year-old municipal court judge in Rhode Island who has made a splash on social media is going national
2:11PM ( 17 hours ago )
Cellphone company T-Mobile to launch TV service next year
Cellphone company T-Mobile says it is launching a TV service next year, the latest company to marry wireless and video
1:46PM ( 17 hours ago )
AP Online TV News
The Latest: Poland says opposition to refugees growing in EU
Poland's new Prime Minister Mateusz Morawiecki says he is happy that Poland's opposition to allowing refugees into Europe seems to be gaining greater acceptance in the 28-nation bloc
6:28AM ( 1 hour ago )
The Latest: Putin warns US not to use force against N Korea
Russian President Vladimir Putin has warned the U.S. not to use force against North Korea, adding that the consequences will be "catastrophic."
6:16AM ( 1 hour ago )
The Latest: Putin suggests US manipulates doping evidence
Russian President Vladimir Putin has suggested that the FBI has manipulated evidence from the main whistleblower on doping at the 2014 Olympics
6:10AM ( 1 hour ago )
AP Business
US stocks indexes close mostly higher after Fed rate hike
The major U.S. stock indexes finished mostly higher Wednesday, with small companies notching big gains as lawmakers in the House and Senate reached a deal on a sweeping tax reform package
5:02PM ( 14 hours ago )
Ex-polygamous sect leader gets nearly 5 years in fraud case
A former polygamous sect leader has been sentenced to nearly five years for a food stamp fraud scheme and for escaping home confinement while awaiting trial
4:18PM ( 15 hours ago )
US stocks moving higher following of Fed rate hike
U.S. stocks are moving higher in afternoon trading following the Federal Reserve's widely expected decision to raise short-term interest rates for the third time this year
3:16PM ( 16 hours ago )
AP Business - Corporate News
As 'net neutrality' vote nears, some brace for a long fight
With 'net neutrality' rules set for termination, some advocates are bracing for a long fight
5:47PM ( 13 hours ago )
Microsoft updates Bing search to highlight reputable results
Microsoft updates Bing search to highlight reputable results, summarize opposing sides on contentious questions
5:36PM ( 14 hours ago )
Greek court backs extraditing Russian bitcoin suspect to US
Greece's Supreme Court has ruled in favor of extraditing a Russian cybercrime suspect to the United States to stand trial for allegedly laundering billions of dollars using the virtual currency bitcoin
9:48AM ( 21 hours ago )
AP Technology News
New Polish PM debuts at summit, seeks better ties with EU
A new Polish prime minister makes his foreign debut at a European Union summit Thursday, a first test if the Western-educated former banker can bridge a deepening rift between his right-wing government and Brussels
7:11AM ( 28 minutes ago )
Putin: US hurts itself with "invented" Trump collusion case
President Vladimir Putin says the allegations of collusion between U.S. President Donald Trump and Russia have been "invented" by Trump's political foes to undermine his legitimacy
7:02AM ( 36 minutes ago )
Italy OKs living wills amid long-running euthanasia debate
Italy's Senate has passed a law allowing Italians to write living wills and refuse artificial nutrition and hydration, the latest step in Catholic Italy's long-running debate over euthanasia and when it's OK to pull the plug
7:00AM ( 39 minutes ago )
South Korean President Moon in China on visit to repair ties
South Korean President Moon Jae-in is in Beijing on a visit to repair ties frayed by a dispute over the deployment of an American anti-missile system
6:58AM ( 40 minutes ago )
Froome says 'wealth of info' can show he's not a cheater
Four-time Tour de France champion Chris Froome says a "wealth of information" can prove his innocence after failing a doping test
6:57AM ( 42 minutes ago )