Disney will reportedly pay US$52.4b for some of the prime assets of the Murdoch media empire (plus another US$13b+ for its debt). Bob Iger's company will take 21st Century Fox film and TV studios
, cable TV channels FX and National Geographic as well as the lion's share of online streaming service Hulu (which was a joint venture between Fox, Disney, Comcast and Time Warner). For viewers the move will significantly expand Disney's surprisingly meagre television offerings. It also brings Fox's X-Men and Avatar franchises into the stable.
But why Fox? Why now? Our readers will recall from last week the CVS-Aetna merger to fend off an impending Amazon challenge to the pharmacy market. This week we see that same defensive mindset coming to the fore again. Traditional broadcasters and studios are under siege from cashed-up powerhouses Netflix and Amazon. Hulu plays third fiddle to the two major streamers and Apple (with its gargantuan war-chest) is also now quickly muscling into contention.
With this deal, Disney has bought itself a massively expanded content set, bolstered production facilities and digital pipes with which it can challenge Netflix. It's a hugely ambitious plan, and while Disney has considerable heft on its side, Netflix and Amazon Prime have a substantial head-start (and market penetration to boot).
But it's not all about America. While much of the coverage has focused on the repercussions within the United States; this is a truly global buyout. With the purchase of Fox's Star India network
of 59 channels Disney is now the largest broadcaster in India. Likewise, the mooted Fox takeover
of British broadcaster Sky News will be of keen interest to its prospective owners. It's yet to be seen whether Fox will be able to clear the regulatory hurdles to take their 39% stake in Sky to the ceiling.
For Disney's CEO Bob Iger, the deal represents the fulfilment of his raison d'etre: transforming a company that made its fortune from hand-drawn animations, theme parks and VHS tapes into a digital powerhouse. He has pushed back his planned retirement a full year to 2019 in order to oversee the transition that will define his legacy. With the acquisition of Murdoch's studios, Iger bettered his earlier achievements (the purchase of Pixar in 2006, Marvel in 2009 and Lucasfilm in 2012). His recompense is allegedly north of the $100m
The nest egg
The deal is a watershed moment in the history of Rupert Murdoch's media empire. From the age of 21 (when he assumed control of Adelaide News in South Australia
) Murdoch has proven himself savvier than his competitors time and time again. In this deal, perhaps one of the last of his business career, the ageing patriarch increased his personal wealth by roughly $4b
. A masterclass in business nous that is underscored by the fact that James Murdoch may take up a senior position at Disney to boot.
It's not (as many early reports suggested) a retreat. The Murdoch family will retain the uncompromising Fox News, alongside the profitable Fox Sports network. The retained assets may also be merged back together with the family's global publishing business News Corp (spun off in 2013). Whatever the fate of their media assets, the money will continue to flow and Murdoch now also has a stake in Disney on par with that of its largest individual stockholder, Laurene Powell Jobs.
And another thing
The asset sale wasn't the only reason Fox was in the news this week. Allegations broke late in the week that senior executives at Fox were party to millions of dollars in bribes
paid to South American football officials in order to secure lucrative broadcast rights. Naturally, FIFA was right amongst the illegality.