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Disney finalises Fox merger

Disney completes its US$71 billion acquisition of the bulk of 21st Century Fox today, paving the way to create what chairman and CEO Bog Iger described as “the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era.”

Disney is acquiring 21st Century Fox’s film production businesses Twentieth Century Fox, Fox Searchlight Pictures, Fox 2000 Pictures, Fox Family and Fox Animation; Fox’s television units Twentieth Century Fox Television, FX Productions and Fox21; pay TV network FX Networks; National Geographic Partners; Fox Networks Group International; pay TV outfit Star India; and Fox’s interests in Hulu, Tata Sky and Endemol Shine Group.

The mouse house will divest 21st Century Fox’s regional US sports channels as a condition for regulatory approval of the deal.

21st Century Fox yesterday completed the spin-off of the principally linear broadcast assets that will comprise the new Fox Corporation, including Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network.

Disney is also acquiring US$19.8 billion of cash and assuming approximately US$19.2 billion of Fox debt as part of the deal.

For its part, Fox has named a raft of new directors as it begins life as a standalone company.

Fox has named Anne Dias, founder of investment fund Aragon Global Holdings, current Formula 1 chief and long-term Murdoch associate Chase Carey, former Telemundo chief and current media investor Roland Hernandez and Republican party Congressman and former House of Representatives speaker Paul Ryan to its board, working alongside Rupert and Lachlan Murdoch and Jacques Nasser.

“We are thrilled to welcome our new colleagues to the Fox board. We look forward to working with and being guided by them as we begin a new chapter, steadfastly committed to providing the best in news, sports and entertainment programming,” said Lachlan Murdoch.

The merger comes ahead of Disney’s planned launch of its new streaming service Disney+ later this year, part of Iger’s strategy of reorientating the company with a set of direct-to-consumer services that also includes ESPN+ and Hulu, in which Disney will now have majority control. While Disney+ will be targeted specifically at a family audience, Hulu will continue to offer a more adult-focused line-up of content including series produced by Fox FX and Fox Searchlight.

Disney will now be under pressure to realise cost savings from the merger, with a significant number of redundancies expected in the combined company’s US workforce. In addition to the elevated cost of financing a deal that came about after a ferocious bidding war with Comcast, Disney also now has to absorb the cost of investing in its new platforms, including foregoing US$150 million this year from its decision to retain rights to content rather than license them to Netflix.