Business U.S. News

Disney Makes Deal for 21st Century Fox, Reshaping Entertainment Landscape

(New York Times)  LOS ANGELES — The Walt Disney Company said on Thursday that it had reached a deal to buy most of the assets of 21st Century Fox, the conglomerate controlled by Rupert Murdoch, in an all-stock transaction valued at roughly $52.4 billion.

While the agreement is subject to the approval of antitrust regulators — and the Justice Department recently moved to block a big media company from becoming even bigger — the once unthinkable acquisition promises to reshape Hollywood and Silicon Valley. It is the biggest counterattack from a traditional media company against the tech giants that have aggressively moved into the entertainment business.

Disney now has enough muscle to become a true competitor to Netflix, Apple, Amazon, Google and Facebook in the fast-growing realm of online video.

At the same time, the agreement means that one of moviedom’s most celebrated studios, 20th Century Fox, will be downsized, with some operations folded into Walt Disney Studios or refocused to make films designed for online distribution. Founded in 1935, the Fox studio championed Marilyn Monroe, produced classics like “The Sound of Music,” released the first “Star Wars” movie and, more recently, turned “Avatar” into the biggest ticket-seller of all time.

But lately, like most of Hollywood, 20th Century Fox has struggled to keep pace with the changing way younger audiences view content — namely on an internet-connected device. Disney said it expected the acquisition to yield “at least” $2 billion in total cost savings.

To complete the integration, a legacy-defining task, Robert A. Iger, Disney’s chairman and chief executive, agreed to renew his contract for a fourth time, delaying retirement from July 2019 to the end of 2021. Mr. Murdoch asked Mr. Iger to stay as a condition of the deal, which was valued at $66.1 billion including debt.

“We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building,” Mr. Iger said in a statement.

Not included in the acquisition: Fox News, the Fox broadcast network and the FS1 sports cable channel. Mr. Murdoch said he would spin those businesses and a handful of other properties, including the 20th Century Fox lot in Hollywood, which Disney is not buying, into a newly listed company.

“I know a lot of people are wondering, ‘Why did the Murdochs come to such a momentous decision?’” Mr. Murdoch said on a conference call with investors. “Are we retreating? Absolutely not. We are pivoting at a pivotal moment.”

Mr. Murdoch’s eldest son, Lachlan, 21st Century Fox’s executive chairman, added that the move was “about returning to our roots as a lean, aggressive challenger brand” that would be “focused at the beginning on must-watch news and live sports.”

Read the full story here: Disney Makes Deal for 21st Century Fox, Reshaping Entertainment Landscape