Disney buys much of Rupert Murdoch’s 21st Century Fox in deal that will reshape Hollywood - LA Times
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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,” Iger said in a statement.
“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,” Iger said.
Disney’s determination to marshal resources is the clearest signal of heightening tensions between technology giants and legacy media. After decades of dominance, Disney, Time Warner, Fox, CBS and NBCUniversal have been scrambling to bulk up to withstand the gale forces coming from Google, Facebook, Netflix, Apple and Amazon.com, which have pushed into television production and distribution.
Disney’s deal to buy Fox studio could bring substantial layoffs, analysts say
Audiences for traditional television have been shrinking, in part, because viewers have so many options, including big-budget shows available through Netflix and Amazon. Movie attendance has stagnated. And Netflix is stepping up its output of films, roiling that business along with television.
“The lingering tensions between traditional media and digital platforms has devolved into an open war,” media analyst Michael Nathanson said in a research note. “It has become increasingly difficult for [film] studios to break through the clutter of high-quality TV options in the home.”
Buying Fox would continue the transformation of Disney, which began when Iger took the helm in 2005. He engineered a series of savvy acquisitions, starting with the 2006 purchase of Pixar Animation Studios — creator of “Toy Story,” and “Finding Nemo” — which reinvigorated Disney’s moribund animation division. The company then bought Marvel Entertainment in 2009 and Lucasfilm in 2012, betting big on marquee film brands such as “Star Wars.”
Then came a shift. This year, Disney spent $1.6 billion to gain a majority stake in BamTech, an online streaming platform that Disney plans to use to launch two streaming services in the next two years, including an ESPN service next year. Disney decided its future was in selling its shows and sports channels directly to consumers. That meant taking on Netflix.
“The core underlying driver for this deal … is the impending battle royale for content and streaming services vs. the Netflix machine,” Daniel Ives, head of technology research for GBH Insights, said in a recent report. The “appetite for content among media companies [is] reaching a feverish pitch.”
A Disney-branded streaming service, set to launch in 2019, will have more firepower with Fox’s assets. Disney would gain 22 regional Fox Sports networks, which could help entice more sports fans to sign up for the proposed ESPN streaming services if the service eventually includes access to Los Angeles Kings, San Diego Padres or New York Yankees games.
Wall Street isn’t sure whether the U.S. Justice Department would bless the combination. It would reduce Hollywood’s television and movie production capacity by eliminating one of the major studios.
The Justice Department’s antitrust division is suing to block AT&T’s proposed $85-billion takeover of Time Warner, which includes HBO, CNN, TBS, Cartoon Network and the Warner Bros. film and TV studio.