December 14, 2017 Democracy Dies in Darkness Disney buys much of Fox in megamerger that will shake world of entertainment and media

By Steven Zeitchik

NEW YORK — The Walt Dis- ney Company, an entertain- ment firm as sprawling as one of its landmark theme parks, has pulled off one of the largest media mergers in histo- ry by acquiring the majority of assets from rival . The announcement resets the Hollywood power grid. Disney, the nation’s largest studio by box office returns and the company behind Mar- vel Studios and the “Star Wars” franchise, is acquiring Fox, the third-largest studio by It goes beyond the Star Wars franchise. As Disney acquires 21st that metric, known for the Century Fox, here's what the deal means for your some of your blockbuster “X-Men” and favorite movies and TV shows. (Nicki DeMarco/The Washington “Avatar” franchises as well as Post) a host of mid-budget crowdpleasers and critically acclaimed films. better equipped to tackle a slew Fox studio lot in Los Angeles It also brings brands such as of Silicon Valley giants. and several national sports FX, National Geographic and Disney will pay $52.4 bil- channels, leaving them in the “” into the same lion for Fox, which for its part hands of 21st Century Fox fold as ESPN and ABC — all will spin off Fox broadcast net- chairman and part of Disney’s gamble that a works, the Channel his family. Robert Iger, the beefed-up company will be and Fox Business Channel, the chairman and chief executive of Disney who had been dis- quisition would leave the enter- came to such a momentous de- cussed as a potential 2020 tainment world with “two of cision,” Rupert Murdoch said. presidential candidate, will the most iconic, relevant and The company was not retreat- continue with the combined dynamic media companies” ing, he noted, but “proud to firm through 2021. while on his own call Iger not- recommit and enable share- The deal takes two media ed that Disney would be “well- holder [opportunities] for years and entertainments titans and, positioned to flip the switch to to come.” after a period of negotiating distribute programs and chan- , Rupert’s chess, essentially divides up nels direct-to-consumers,” al- son and the executive co-chair territory between them. Iger luding to the ways that the Sili- of 21st Century Fox, noted that will lead the legacy- con Valley companies have “while the merged business is entertainment charge against a disrupted the entertainment about scale, the new Fox is slew of new competitors, while business. about returning to our roots as Murdoch will attempt to fend There had been reporting a lean and aggressive brand.” off the challenge on another that James Murdoch, one of The family said there had front, as the business of news Rupert’s sons and the CEO of not been talk yet of recombin- and live programming faces 21st Century Fox, would ing with the print media-driven challenges from digital up- be given a top executive role at . “If we do, it’s well starts. Disney as part of the deal, but into the future,” Rupert Mur- Each side sought to paint Thursday brought no definitive doch said. their business as strong- word of such a move. Iger said Some insiders said they saw er because of the moves. he “look[s] forward to talking Murdoch’s end-game as going “The acquisition of this stel- to him about it” in the coming beyond Fox. lar collection of businesses months, referring to James. “Rupert doesn’t see this as from 21st Century Fox reflects As part of the all-stock deal, much as selling as he does buy- the increasing consumer de- Disney will also acquire Fox’s ing,” the Los Angeles-based mand for a rich diversity of 30 percent stake in Hulu, a investment banker Lloyd Greif entertainment experiences that group of U.S. cable stations said. “He’s buying Bob Iger are more compelling, accessi- including FX and National Ge- and his Midas touch when it ble and convenient than ever ographic, several powerhouse comes to filmed content,” before,” Iger said in a state- international satellite channels Greif said, referring to the ment Thursday morn- such as Star India and Sky Ita- stock transaction, which ing. “We’re excited about this lia, and a host of U.S. regional will put about 25% of Disney extraordinary opportunity to sports outlets. shares in the hands of Fox significantly increase our port- The deal takes Murdoch out shareholders. folio of well-loved franchises of much of the scripted televi- “It’s a vote of confidence by and branded content to greatly sion game and all of the film Rupert in Iger and his manage- enhance our growing direct-to- business, ending a Hollywood ment team over his own. He consumer offerings.” association that began more sees troubled waters ahead and “The new Fox will draw than three decades ago when wants the best ship and crew to upon the powerful live news Murdoch paid about $600 mil- navigate them.” and sports businesses of Fox, lion to buy 20th Century Fox For Iger, Thursday’s deal as well as the strength of our from industrialist Marvin Da- amounts to another feather in broadcast network,” said Mur- vis and crested as recently as an already decorated cap that doch. “It is born out of an im- 2014 when Fox led all studios includes the successful acquisi- portant lesson I’ve learned in by market share for the first tions of Pixar, Marvel and Lu- my long career in media: time this century. casfilm. namely, content and news rele- On their call, the Murdochs But Fox will provide the vant to viewers will always be sought to explain their ra- greatest integration challenge valuable.” tionale for the sale. yet, with many of the newly On a conference call with “I know a lot of people are acquired company’s divisions analysts, Murdoch said the ac- asking why the Murdochs overlapping with Disney’s ex- sets the stage for a battle with tion, Greif said, that could see isting operations. And greater Silicon Valley titans like Net- , CBS, Lionsgate and scale, while valuable in negoti- flix, Apple and . The Sony seek large buyers too, ating traditional distributor conglomerate is building up an and leave just a few large lega- deals with cable operators and arsenal of programming in the cy conglomerates such as Dis- movie theaters, is no guarantee hope of fending off those ney-Fox, Universal of direct-to-consumer success. firms’ forays into the content and a potential AT&T Time Wall Street was bullish on market. With enough materi- Warner. the announcement, sending al, it hopes, it can develop a Insiders said they believe Disney’s stock up nearly 3% streaming service that will win Disney will become a kind of and Fox almost 7%. over customers who’ve cut the canary in the coal mine for oth- Regulators and shareholders cord on its products in favor of er content providers as they must still approve the Disney- subscriptions to digital rivals. seek to launch direct-to- Fox deal, but most analysts do On the Disney call, Iger said consumer businesses; if the not expect it to face problems. that he envisions Disney’s new world’s largest media con- In a very different scenario, the service, set for 2019, co- glomerate is unable to success- DOJ is currently suing AT&T existing with Hulu, the former fully do so, it might make them to stop its acquisition of Time in a “family vein” and latter as reconsider whether they should Warner, noting concerns about “adult-oriented.” Analysts, even try. the marriage of a distributor however, have wondered what The news provides a and content provider. the long-term future of Hulu bookend of sorts to a 1995 A few experts dissented, will hold now that Disney merger that also saw Disney though, and said the sheer vol- owns a controlling 60% stake combine with a television giant ume of creative assets could (Comcast Universal has 30% — Capital Cities/ABC — set- give regulators pause. and Time Warner the remain- ting off a wave of entertain- “The scrutiny could be very ing 10%). Would executives ment-industry consolidation. close and the new antitrust shelve the service and Coincidentally, it was that deal leadership is unpredictable at their resources that brought Iger into the Dis- this point, as witnessed by to Disney’s proprietary plat- ney fold: he was the president Time Warner-ATT,” said Carl form? Or would they actually of Capital Cities/ABC at the Tobias, a professor at the Uni- try to maintain both Hulu and a time. versity of Richmond law separate streaming service? In the call, Iger alluded school who has studied anti- “I think it’s going to be to that past, saying he was a trust issues. “I expect DOJ and tough– I don’t understand how “product” of that merger, Congress will be most interest- you would segment it,” said which in turn makes him ed in what this combination Aaron Shapiro, the founder of “respect and appreciate the tal- will mean for consumers and Huge, a digital marketing ent” that comes with the Fox whether it concentrates too agency that has done work for acquisition. much power in the new entity.” Hulu. Combined, the new Disney He said he eventually saw could boast as much as $75 one Disney entry point for con- billion in revenue, with nearly sumers, under one brand, what- a third coming from Fox assets. ever it was called. “I think they Fox currently employs well need to put all their eggs in one over 20,000 people around the basket and go for it,” he world, many of them at the di- said, noting the challenge of visions being acquired by Dis- attracting many of the 100 mil- ney. lion+ subscribers who’ve The deal makes Disney a signed on for . behemoth of the type entertain- The Disney acquisition hints ment has never seen before and at a further industry consolida-