After weeks of publicly mulling over a merger, Disney confirms it is buying some of 21st Century Fox’s assets, including, of course, its movie and TV studios, for $52.4 billion in stock.
In the understatement of the week, Disney CEO Bob Iger, who will now stay on through 2021 instead of stepping down in 2019, says, “The deal will also substantially expand our international reach.” Entertainment Weekly has some more details of the purchase, but as we’ve previously reported, Disney’s not interested in Fox News or Fox Sports. Instead, those networks will be “spun off for shareholders.” In addition to bringing the X-Men back to Marvel and setting up all kinds of crossover possibilities between Andi Mack and The Simpsons, Disney is also picking up Fox’s 30 percent stake in Hulu, giving it a 60 percent stake. This could save Disney the trouble of launching an entirely new streaming service in an increasingly crowded market (albeit the only one that would have all the MCU and Star Wars films). But right now, the plan is for Hulu to exist alongside a new subscription video on demand service.
Speaking with Variety, Iger says Hulu is actually a great fit for the new assets, as it’s “a more adult-oriented product [that will benefit from] Fox television production and FX.” The publication’s sources at Hulu indicate that all of the platform’s parent companies, including Time Warner and NBCUniversal, have tried to “gain full control” of the service in the last two years. In 2018, some of the restrictions imposed on Comcast, which bought NBCU, regarding Hulu will expire, which Variety believes will set up a whole new bidding war.
At $52.4 billion, this acquisition is easily the priciest in Disney’s history—the media conglomerate previously snapped up Pixar for $7.4 billion, and Marvel and Lucasfilm (including the Star Wars franchise) for the relatively low price of $4 billion each. But, as The Los Angeles Times reports, a merger of this size requires some serious scrutiny from antitrust regulators, some of whom are already saying “any increase in Disney sports programming will be extremely problematic.” Throw in the Hulu majority stake and “given the size of the acquisition, it will raise eyebrows in Washington,” USC Marshall School Of Business professor Gene Del Vecchio tells the Times. The Justice Department has thrown its weight around regarding AT&T’s acquisition of Time Warner Inc., but Disney is expected to counter any antitrust concerns by saying it “needs to bulk up its entertainment assets to compete with video and other entertainment inroads being made by technology titans Google, Facebook, Amazon.com and Netflix.”
Update, Thursday 10:09 a.m.:
Speaking of federal regulators, Variety now reports that Disney will pay a $2.5 billion “breakup fee” if the merger is blocked. And if either party gets cold feet and decides to back out, they’ll have to pay a $1.52 billion fee to the other side.