Empire strikes Fox: Disney is now guardian to a galaxy of content

15 Dec 2017

Star Wars: The Last Jedi. Image: Lucasfilm/Disney

Fox deal gives Disney considerable leverage over the global content industry.

Disney has agreed to buy 21st Century Fox in a deal worth more than $52bn in stock but with a total value of $66.1bn.

In a move that should attract the attention of giant telcos in the US – such as AT&T, Verizon and Comcast – and strike fear into the heart of streaming giant Netflix, Disney has taken a commanding position in the content business in one fell swoop.

‘The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences’

The only route now for Netflix, Amazon and other born-on-the-internet streaming players is to keep on the road of generating their own content as Disney content will surely disappear from the streaming platforms.

The mammoth deal will see Disney get its hands on Fox’s movie studios as well as networks such as National Geographic, FX and Asian TV operator Star TV. It will also gain stakes in Sky, Endemol Shine Group and a panoply of regional sports networks.

As part of the deal, Disney will assume $13.7bn of Fox’s net debt.

“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” said Robert Iger, chair and CEO of The Walt Disney Company.

“We’re honoured 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.

“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.

Consolidation of content and the spectre of net neutrality

Competing operators will now be pushed to either sign deals with other content firms or embark on a strategy of creating their own content as is evident by players such as Orange in Europe, which has just embarked on its own €100m content strategy.

The plates are shifting. Time Warner, for example, is about to be owned by AT&T.

And then you have net neutrality thrown into the mix after the FCC yesterday (14 December) voted 3-2 to repeal major regulatory decisions that were made during the administration of former US president Barack Obama. This has set the stage for internet fast and slow lanes for content companies that will either pay for speed or risk being throttled.

Disney, which is not an internet service provider (ISP), could use its considerable content empire as leverage over the ISPs and telcos to bargain fairer prices.

Either way, consolidation of internet and digital content is happening at an alarming pace.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years