Disney lands sport and digital assets in bumper Fox deal
Walt Disney, the US media and entertainment giant, today agreed a mammoth $66.1-billion deal to acquire key parts of 21st Century Fox, the international television and film company headed up by chairman Rupert Murdoch.
The assets bought by Disney, which is led by chairman and chief executive Bob Iger (pictured), include Fox’s movie and television studios, Star India, the burgeoning Indian pay-television broadcaster, and stakes in Sky, the UK-based European subscription broadcaster, and the Hulu streaming service.
Disney had been in competition with Comcast, the US media titan that owns national network NBC, only for the latter to bow out earlier this week.
Subject to regulatory approval, Disney is to pay $52.4 billion in stock and assume $13.7 billion in debt to buy the Fox assets.
As part of the deal, Fox shareholders will receive 0.2745 Disney shares for each Fox share held, giving them about 25 per cent of Disney.
Meanwhile, the 86-year-old Murdoch and his family will retain control of US operations including the main Fox network, the Fox News, Fox Business, Fox Sports 1 and Fox Sports 2 channels and cable outlets such as the Spanish-language Fox Deportes and Big Ten Network, the sports channel that is a joint venture with US college sports’ Big Ten Conference, all of which will be spun off into a new public company.
Fox is to continue to pursue its acquisition of the 61-per-cent stake in Sky that it does not already own, with a view to Disney taking full control when this is achieved. That £11.7-billion ($15.7-billion) deal is subject to an ongoing investigation by the UK’s Competitions and Markets Authority, with Fox and Disney expecting it to be cleared and completed by next June.
Disney expects the full acquisition of the Fox assets to be completed within two years and to realise cost savings of $2 billion from combining the overlapping businesses.
The deal will significantly strengthen Disney’s international sports offering, which already includes renowned US sports broadcaster ESPN, given that Star holds premium cricket rights in India, while Sky, which has 22.4 million subscribers across the UK, Ireland, Germany and Italy, is a prominent broadcaster of soccer and other sports in Europe.
Through the takeover, Disney will also be getting its hands on 22 regional sports networks in USA, increasing its stake in Hulu from 30 per cent to 60 per cent, and landing Fox’s 50-per-cent stake in Dutch production company Endemol Shine.
In a statement, Iger, who is to remain with Disney through 2021, said: “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.
“We’re honored 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.”
Murdoch said: “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.
“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.”
Disney’s move is being seen as a power play to pool resources amid growing competition from digital powerhouses such as Google, Facebook, Netflix, Apple and Amazon, some of which have moved into the sports sphere.
The company has already shown its ambitions online through the acquisition of a majority holding in BAMTech, the live-streaming technology company born out of Major League Baseball Advanced Media and plans for ESPN Plus, an over-the-top streaming platform set to launch in the spring of 2018.
This is aimed at helping Disney reach out to ‘cord-cutters’ – those that have cancelled their linear television subscriptions in favour of receiving programmes via other digital delivery methods.
It emerged last week that ESPN had increased its millennial audience - those aged 18 to 34 - by 4 per cent in the last year.
The audience figures came as a welcome boost for the broadcaster after it recently announced another wave of job cuts.
Late last month, it was revealed that 150 members of staff were being laid off from various departments, including studio production, digital content, and technology.
The job cuts represented the second round of staff layoffs this year for ESPN, after about 100 employees, including on-air personalities, were part of a cutback in April.
The struggling cable sports giant once again got the blame earlier this month as Disney reported net fiscal fourth-quarter income of $1.75 billion, down 1 per cent from a year earlier, with revenue falling 3 per cent and the company failing to meet analysts’ expectations.