David Farnor | On 15, Dec 2017

Disney will officially buy 21st Century Fox, in a colossal merger worth $52.4 billion.

One of the biggest deals in media history, the agreement would see the largest studio by box office and the third-largest join together. The prospect of the two uniting their film and TV studios, as well as their cable and international TV businesses, has been the subject of rumour for several weeks, ever since word of talks between them came to light.

It will give Disney the rights to a whole heap of additional properties that have previously been exclusive to Fox, including X-Men, Fantastic Four, Deadpool and Avatar. Disney, which already owns Star Wars (via Lucasfilm) and Marvel, not to mention Pixar, will now be responsible for the vast majority of your childhood memories.

The prospect of Wolverine and the X-Men potentially joining the wider MCU has had fans excited since the rumours first began, but the deal marks a much bigger play for the House of Mouse, as it consolidates its media empire and content library. Indeed, Disney is planning to go global with own over-the-top streaming platform, recently ending its long-standing relationship with Netflix to launch its own rival subscription service (in the UK, currently branded as DisneyLife). At a time when standalone SVOD platforms are making for a fragmented market, Disney is assembling a monopoly big enough to take on the streaming giant.

“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,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “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.”

Disney’s announcement of the agreement focuses on its ability to “build more direct relationships with consumers around the world and deliver a more compelling entertainment experience to consumers wherever and however they choose”, all of which translates into its plans to establish a sizeable streaming presence.

It is not just films and franchises, though, that Disney will be acquiring: it is also a powerful sports presence, and international broadcaster reach.

Immediately prior to the acquisition, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company that will be spun off to its shareholders. Adding 21st Century Fox’s premier international properties to Disney, meanwhile, spells a wider array of local, national and global sporting events for Disney’s planned director-to-consumer sports platform under its ESPN brand. The acquisition will also enable Disney to accelerate its use of innovative technologies, including BAMTECH, to bolster its digital development.

It also intends to add Sky to its empire, which serves nearly 23 million households in the UK, Ireland, Germany, Austria and Italy. Prior to the close of the transaction, it is anticipated that 21st Century Fox will seek to complete its planned acquisition of the 61% of Sky it doesn’t already own. 21st Century Fox remains fully committed to completing the current Sky offer and anticipates that, subject to the necessary regulatory consents, the transaction will close by June 30, 2018. Assuming 21st Century Fox completes its acquisition of Sky prior to closing of the transaction, The Walt Disney Company would assume full ownership of Sky, including the assumption of its outstanding debt, upon closing.

Throw in Fox Networks International, with more than 350 channels in 170 countries, and Star India, which operates 69 channels reaching 720 million viewers a month across India, and you have a deal with wide-reaching ramifications for all corners of the modern media world.

Consider, just for one example, US subscription service Hulu, which has previously had three owners: Disney, Fox and Comcast. With Disney now taking over Fox’s share, it will have a controlling stake in the platform, which will impact the kind of content that will be available on Hulu (it is a natural fit for Fox’s adult content, such as The Americans, keeping Star Wars and Marvel separate to DisneyLife) and, as a result, is likely to change Comcast’s own approach to the service.

With Disney occupying a dominant position within the wider entertainment landscape, meanwhile, the prospect of less competition and less choice could spell bad news for consumers. The transaction is subject to shareholder approval by 21st Century Fox and Disney shareholders, as well as clearance under the Hart-Scott-Rodino Antitrust Improvements Act and a number of other non-United States merger and other regulatory reviews, but what is clear for now is that the consequences of this merger are only just beginning to become clear.

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