Disney and Fox Merger?

[shadowkat]

So, I've been scanning articles on the big Disney/Fox proposed merger or Disney's purchase of Fox.
And, I'm hoping it doesn't happen, but have a feeling it will.

Stupid Regan and the weakening of the Anti-Trust Law, this is what happens when you elect Republicans they destroy our economy and our world. Moral? Don't ever elect Republicans to political office, elect your neighbor's dog instead. Much less damaging. I'm only half-joking.



1. Why a Blockbuster Deal Between Disney and Fox is Bound to Happen -- Forbes.

So, what makes this deal a good idea for both sides, and why do I think a deal is still likely despite the fact the studios supposedly stopped negotiating? Let’s look at the basic facts, and what they tell us about the necessity of an eventual deal for both Disney and Fox.

Fox doesn’t feel they can achieve the scale necessary for longterm competitiveness in the global digital age, against so many better-positioned competitors who enjoy multiple key advantages. Instead, the studio wants to streamline their company into a news and sports enterprise, so they need to sell the film and TV divisions.

With so many major brands and assets, Fox obviously won’t have any trouble finding interested buyers. If Disney won’t make the deal, another studio will. However, while Fox doesn't have to be in a hurry, the underlying reasons and pressures necessitating this move require movement on a big sell-off deal relatively sooner rather than later. At the point Fox has recognized they aren’t well positioned in a marketplace that requires greater scale than they can achieve, they also recognized that their position is going to decline while that of competitors will improve, so the strength of their position will deteriorate over time in that regard. The value of their properties, meanwhile, will fluctuate as some enjoy greater success (like Deadpool) while others unexpectedly drop (like Alien: Covenant).

Fox also faces a jarring reality concerning their news assets, with multiple revelations and accusations causing the firing and ouster of many on-air personalities and behind-the-scenes figures. There have been boycotts and other movements applying pressure to various advertisers on several Fox programs, as well. Putting more money and resources into improving the position of their news division, creating new expanded programming and new avenues for outreach, and restructuring the leadership is not just a longterm goal, it’s becoming an immediate necessity. Doing so organically within the context of a fully developed plan for a streamlined, news-and-sports media company requires moving ahead with negotiations and getting a deal in place to sell off the other divisions and assets.

Lastly, from Fox’s perspective Disney is the best buyer. That's where several of the biggest Fox assets have the most importance and value, meaning that's where they can eventually get the best terms. Disney is also in the best position to make a deal with Fox soon, and to meet more of Fox’s needs in a final agreement. And I suspect Fox thinks there’s some sort of tradeoff to be had regarding sports — ESPN and Fox Sports are major entities jockeying for position, and Fox could obtain some extra elbow room if the two studios can reach certain understandings.

The primary incentives for Disney are obvious. They want the rights to the X-Men and Fantastic Four brands. They want distribution rights for the original Star Wars trilogy and prequel trilogy (most of those rights revert back to Disney in 2020, but the original 1977 film's rights will remain at Fox). They want the Avatar franchise. They want the FX channel. And they want the vast, impressive, lucrative library of Fox movies and TV series from past and present, to add to their upcoming streaming service -- and, probably, to deny those movies and series to Netflix, along with the Disney, Marvel, Pixar, and Lucasfilm properties. That’s the short version for Disney, but it’s worth looking more closely at a few of these to drive home why they’re not just a wish-list, they’re ultimately must-haves.

2. Disney's Potential Fox Acquisition Shows Radically Different Responses to Hollywoods Silicon Valley Threat - Washington Post.

Not everyone agrees this is a good idea. As the reports of a deal heated up this week, Disney’s stock price dropped 7 percent. Investors’ concern is that Disney would be trying to take on nimble competitors by adding even more infrastructure.

“It’s shocking, just poor strategic thinking,” said BTIG analyst Rich Greenfield, one of those naysayers. “Instead of investing money directly in original content and building its direct-to-consumer business, it’s tying itself further to a legacy ecosystem.”

Fox’s films, for instance, are often tied up in existing long-term deals with premium cable channels that prevent them from being sold directly to consumers.

Almost everyone agrees that a supersized Disney would benefit from Iger staying. The 66-year-old is scheduled to depart the company in 2019 — itself a deferral from 2018 — possibly to run for public office. But an integration after a long regulatory period could mean the executive would need to stay on until 2020, especially given the lack of successors.

Most experts dismissed the idea of James Murdoch fast-tracking to the top position at Disney, as a Financial Times report earlier this week suggested he could. Instead, the 44-year-old would take a job within the company, possibly running the combined outlets’ international operations, and eventually make a run at the big job.

“I think Rupert realizes Iger is a good horse to ride,” said George Geis, a professor at UCLA’s Anderson School of Management who specializes in mergers and acquisitions. At the same time, he added that he “wouldn’t be surprised if [James] Rupert could get meaning out of this.”

Murdoch’s motives divided experts. Certainly, pocketing billions of dollars in stock to walk away from the scripted entertainment business looks a lot like an exit strategy. But a large stake in Disney, a potential board seat and a shot at a Murdoch family member running it all could be viewed as much an expansion of power as a shedding of it.

“Yes,” laughed Wieser, when asked if Murdoch was getting out or further in.

These maneuverings could come with collateral damage for the tens of thousands of people Fox employs or works with as a combined company streamlines operations. One producer who makes movies with Disney said that “as a business person, I understand scale, but as a creative person, I worry about having one less buyer for material.”

A creator with a project in development at Fox said he had an even more pressing concern. “I’m super-stressed right now,” said the person, who spoke on the condition of anonymity to protection his professional relationships. Projects would inevitably be discarded as redundant or not deserving of resources, and he feared his would be among them.

Most in jeopardy are the areas where Fox’s operations overlap with Disney’s, such as animation and family-friendly entertainment. The fate of Fox’s elaborate offices in midtown Manhattan and the Westside of Los Angeles would also be in question as a combined company looked to cut costs.

[BTW the assets under contention are all of Fox's television and film properties, potentially excluding the news and sports division. And all of Disney's properties.]

3. Disney Buying Fox Would be Bad News for Hollywood - Screen Rant.

The Walt Disney Company are close to finalizing their purchase of 20th Century Fox – a move that could spell a very bad future for Hollywood. Disney are a unique commodity in 21st century business. Over the better part of a century, they have managed to accumulate vast amounts of power, money and industry clout, all while retaining that cuddly exterior as the happiest place on earth that inspires millions of people to dedicate themselves to the House of Mouse.

That’s a feeling that’s only grown in the past three decades, as the company purchased major ownership stakes in the ABC network, sports coverage behemoth ESPN, The Muppets Studio, YouTube multi-channel network Maker Studios, Marvel Entertainment, and Lucasfilm. That doesn’t even take into account their major holdings in the myriad of Disney properties, off-shoots, brands and industries, which stretch from film to TV, music, radio, property, their iconic theme parks and cruise lines, and so on.

...........

Consider this: As noted by Forbes, “Last year, Walt Disney had a jaw-dropping 26% of the domestic box office while Fox had 13%. With Fox and Disney combined into one entity, it’s plausible to see Walt Disney’s theatrical output controlling close to 40% of the theatrical business.” If that were to happen, Disney could have the clout to reconfigure the business of film distribution and the theatrical experience. That could mean higher ticket prices, bigger cuts of the grosses going back to the guys at the top, tougher deals for theatres, and so on. When the biggest share of the market is going to one company, who’s going to stop them?

Fox’s work tends to skew older than Disney – think Logan, FX’s Legion, and of course Deadpool – and it’s in this willingness to eschew the formulas of the big boys at Marvel where they’ve succeeded the most. There’s no guarantee Disney will let that stick if they own the nest. Sure, getting all the Marvel ensemble under one roof has its advantages, but something’s got to give. It may be the number of films we get, as output could potentially decrease so that Disney can favor one big money-spinning franchise over another.

4. If Disney Buys Fox Could Sky News Survive - the Guardian.

The prospect of Disney swallowing 21st Century Fox (AKA Mickey Mouse swallowing Rupert Bear) is real. Talks between the two giants are on again. Price alignment is being pursued. There are even tales that James Murdoch may emerge as Disney chief executive if the price match becomes a corporate love match.


But just concentrate on what may happen next if the deal is made. Sky TV, including Sky News, would be Disney-controlled. No competition and mergers policy there (which may be why the Competition and Markets Authority has asked for yet more time to make up its mind). Perhaps no one will need to ponder further because the shadow of Murdoch is lifted. But perhaps, too, Disney won’t want to keep Sky News – and its losses – going anyway. A zero-sum game of some sadness.

And watch News Corp, the separate and much less profitable part of the Murdoch empire. Would it make any sense to support it by keeping a few Australian cable assets churning? Is it wise to stake the rest of the Rupert pot on Fox News and US sports rights, both vulnerable to the tides of fashion? There all sorts of sharp questions to raise as Mr M puts a lifetime of business accretion on the block.

5. Hot Air -- Disney in Talks to Buy Fox, Glorious Marvel Reunion on the Horizon

The Disney/Fox deal isn’t done yet but it may be getting close. Variety reports today that teams of bankers are helping to work through the negotiations:

"Disney is working with a group that includes JP Morgan and Guggenheim Partners. Both entities have long relationships with Disney.

Fox has Goldman Sachs and Centerview Partners crunching its numbers. Centerview is said to be focused on financial details related to the Fox assets that would not be part of the Disney acquisition. Goldman Sachs and Centerview previously advised Fox on its unsolicited $80 billion bid in 2014 for Time Warner, among other deals.

It is possible that a deal could be struck before Christmas, according to a source close to the matter."

Whether the ink dries next week or Christmas Day, this deal would mean a bunch of future Marvel movies in which nearly all of their major characters could appear in the same series of connected films. That’s a project that has been going extremely well for Marvel over the past 10 years and very poorly for almost everyone else who has tried it. But as someone who grew up reading these comics, this is something I’ve wanted to see for 40 years. I’m getting old, people, so let’s make this happen.

6. A Disney/Fox Deal Means Far More than Just the X-Men Joining Marvel

And while Walt Disney is a publicly traded company and not a charity, this wouldn’t necessarily be good for the overall industry. Fewer major studios mean fewer places for artists to pitch their work, and thus potentially a less diverse slate of movies and television shows. Less competition could also drive down compensation for said artists, and Disney would be powerful enough to (if it chose to) essentially set the status quo for compensation for the next round of union negotiations. But at least we’d get a decent Fantastic Four movie, right, guys?

Disney would own the X-Men characters, the Fantastic Four franchise and a host of other huge franchises like Avatar, Alien, The X-Files and The Simpsons. I guess Avatar 2 (or, less likely, Deadpool 2) wouldn’t be the first $1 billion+ grosser outside Disney or Universal since Transformers: Age of Extinction back in 2014. Since Disney already owns ABC, I don't think it'd be allowed to own the Fox broadcast network as well, although it could get the cable channels (like FX) and enough of a stake in Hulu to make it Netflix’s primary rival whether Hulu becomes Disney’s de facto streaming service or not. So it could well be Disney vs. Netflix vs. Amazon vs. everyone else.

Even if X-Men joined the MCU, Fox has just found its footing in terms of differentiating X-Men from the MCU or DC Films by going all-in with genre appropriation and offbeat comic book cinema. Would we lose R-rated fare like Logan and Deadpool or genre-specific offshoots like The New Mutants? Marvel has thrived partially because it didn’t have access to the most popular characters and had to make its B-characters into A-level movie stars. Assuming Marvel even wants those new franchises, what will the MCU look like if it can churn out X-Men, Fantastic Four and occasional Sony-produced Spider-Man films?

Disney won’t own Fox News or Fox Sports, but what do you think the owners of Fox News are going to do with lots more money on hand and an explicit devotion to news and media? It’s not Disney’s responsibility to make sure that its money doesn’t go toward evil, but the powers behind Fox News having more money and more free time to devote to media and politics is not going to be good for media and politics. At least Captain America can punch Dr. Doom. Now it isn’t all doom and gloom, but silver linings require a certain degree of idealistic optimism.

I’d like to think that Disney wants Fox not to crush a major competitor but rather to use Fox’s bench in terms of making adult-skewing fare a major asset for Disney. I’d like to think that Disney would continue to let Fox do what it wants (as it has given Marvel and Lucasfilm comparative creative freedom) and allow Fox and Fox Searchlight to allow Disney to also corner the market on adult-skewing prestige fare, Oscar-season biggies and grown-up blockbusters like War for the Planet of the Apes or Murder on the Orient Express. But that’s no guarantee.

And if Disney views the Fox/Fox Searchlight fare as glorified prestige releases, less about drowning in profits than cornering the market, then those films would be less beholden to the whims of theatrical moviegoing. They would dominate the blockbuster realm with the likes of Star Wars and Beauty and the Beast, while also offering (presumably under Fox’s banner or the likes of Touchstone) adult-skewing biggies like The Revenant as well. But that’s assuming Disney has any interest in the likes of Kingsman: The Secret Service, Gone Girl or 12 Years A Slave.

Again, that’s not inherently good for competition, as it would essentially turn Hollywood into “Disney/Fox versus everyone else” with Warner Bros./Time Warner Inc. and Universal/Comcast Corp. as the only ones who could stand up to the Mouse House. Assuming Disney doesn’t decrease the Fox output, those three studios alone could control 55-70% of the domestic market share in any given year. Yes, Lionsgate and the smaller distributors (A24, Open Road, STX, etc.) could still do their thing, but Sony and Paramount/Viacom Inc. would be in trouble.

It might be good news for those of us who still champion the theatrical experience. Disney has thus far been the major holdout in would-be attempts to jump-start early VOD. If that one company now controlled 35-40% of the marketplace, it could be a boon for theaters, assuming Disney doesn’t use its overall dominance to extract concessions and/or extra money from theaters in a way that hurts its rivals and/or the theater chains. Again, I’m not saying it would, and I hope that it wouldn’t, but it isn't required to have the same values as the characters in its movies.

Maybe the deal won’t go through, although Fox apparently wants to unload its film/TV divisions, so someone is probably going to snatch it up (at least Universal and Fox would together control only 25% of the market). It is … disconcerting to see how much of the talk concerning this potential merger has been focused entirely on the notion of Deadpool hanging out with Thor. This would be a game-changing shift in the entertainment industry, one that would cement Walt Disney as an ultimate power in the world of TV and film while potentially allowing Fox to become even more of a dominant player in media.

I don't know if I want this to go through. But zip control either way. The world it just gets more disturbing every day. But hey, more fodder for my sci-fi novel about corporations ruling the universe.

Comments

[wendelah1]

I rarely watch comic book movies--Wonder Woman was an exception--and I don't use streaming services, except the one I get for free with my library card. I don't know which corporation is worse--Disney is evil. Fox is Evil. A pox on both their houses.

I'm more worried about Amazon destroying the grocery industry. I still need to eat.

[shadowkat]

This is about a lot more than owning the rights to Marvel.

I don't know why you are worried about Amazon ruining the grocery store business. Have you been inside a whole foods store lately? I have. It's not a problem. There's still better options out there.

[wendelah1]

This is about a lot more than owning the rights to Marvel. Yes, sorry if I seemed flippant. This is the problem with conversations on the internet. If Disney does acquire Fox, it brings them just that much closer to their true goal of world domination. Also, it's likely to cost jobs, creative and otherwise, in the very city I live in, for years to come. It's been in the news here, too. People are concerned, rightly so.

I don't know why you are worried about Amazon ruining the grocery store business. Oh, I don't know. Maybe because Bezos has disrupted every retail industry he's entered and because he wants to destroy this one, too remake this one in his own image.

Have you been inside a whole foods store lately? I have. It's not a problem. There's still better options out there. No. I have not. The closest Whole Foods to me is nearly six miles away--a twenty minute drive in good traffic and closer to 30 in normal traffic. I used to stop at the one on Sepulveda on my way home from work but since I retired, I shop closer to home. There are options--for now--but the acquisition was in October. Give him some time. Retail is a tough gig no matter what but Amazon treats its employees like human garbage--I don't want that for the workers at my local stores.

[shadowkat]

Retail is a tough gig no matter what but Amazon treats its employees like human garbage--I don't want that for the workers at my local stores.

I know of two people who work for Amazon who have had no complaints. One as a part time gig in their warehouses, and she's happy with them. And the other as a freelancer copy-editor who is also happy with Amazon's Create-Space.

I've worked in about five different industries. The publishing industry (is notorious for how it treats people and is horrible), the video game industry (also horrible), the banking industry (not as bad), insurance (slightly better but not by much), telecommunications (horrid), and the railroad (better than the others).

Entertainment? Worst industry to work in. NBC makes Amazon seem rather kind and friendly. Disney? I've heard negative and positive reports. So mixed. CBS - avoid.

Whole Foods is known in NY as "whole in your pocket book foods", most people here go for Trader Joes, and elsewhere. It's harder to take that over than books. Mainly because people like to buy food fresh from the market and cheaply. Amazon hasn't killed the other markets as much as people think. Barnes &Nobel actually closed more book stores than Amazon did, and is a far nastier company.

I know a lot about this...due to my crazy work history. ;-)

That said, I am hoping Amazon puts their headquarters in any city but NY. Be a nightmare here.

[shadowkat]

You aren't going to get me to hate Amazon - because it's been good to me as a customer. Packages delivered for the most part on time, and cheaply. Provided me with affordable means to publish my novel, far better than others. I find it excellent for books, and to a degree clothing.

Not so much for furniture and other products. It's a distribution channel mainly and provides discounts on other products. But you have to be careful. I've managed to get things I couldn't find elsewhere via Amazon (including books which aren't available in book stores). And it has good programming options on Amazon streaming. Plus the Fire Stick was a cheap way to obtain streaming.

When I haven't liked something -- was able to return it or get a discount or a credit.

Their customer service is better than most.

Also, I haven't personally received any negative reports from people I know working for them. Just general stuff from folks with no specific examples or proof, usually obtained from news media sources (third party not primary).

Disney, on the other hand, I've gotten first-hand accounts from over the years. So have mixed views. And don't get me started on Fox.