DISNEY Buying Most of FOX, Hoping They'll Be Allowed (And A Quick List of What They Ended Up Buying)
Well, after a few weeks of rumors, it finally happened. Disney has dropped just over $50B, absorbing another $14B in debt, and snagged up several parts of FOX that Fox couldn't quite keep afloat to their satisfaction. Those parts include:
20th Century Fox,
20th Century Fox Television,
Fox Sports Regional Networks,
National Geographic Partners,
Star India and
Fox’s interests in Hulu*, Sky, and Endemol Shine Group.
*a 60 percent stake in Hulu.
What DISNEY did not buy from Fox was the
Fox (television) Broadcasting network and stations,
Fox News Channel,
Fox Business Network,
Big Ten Network.
So what does this mean?
Disney will now own these titles or franchises:
Alien, (This could be good!)
Alvin & the Chipmunks,
American Horror Story,
Deadpool, (Don't muck with the Merc!)
Fantastic Four, (We might finally get a decent FF film?)
Kingsman, (OMG, they could seriously improve this franchise!)
Night at the Museum,
Planet of the Apes,
Predator, (This writer is drooling)
The Chronicles of Narnia,
This Is Us, (Yes, it was a Fox product on NBC)
The Maze Runner,
X-Files, (Oh crap, now we can really get into the conspiracies!)
And untold hundreds of other franchises.
That is, if federal antitrust regulators allow the deal. (For some reason, I'm thinking Trump's friends will let this slide.)
Do you remember when Logan was going to be Hugh Jackman's last run at playing Wolverine? Last week he (may have joked) said that if Disney buys up Fox, he would consider returning. Wow... that says a lot about how Fox ran things!
But with this new deal, Disney now has a ton of new Marvel character righs back under their belt and sure enough, a few quick announcements were made today.
"We have the opportunity to expand iconic franchises for new generations of fans just as we have done with Marvel and Star Wars… We’re also looking forward to expanding the Marvel Cinematic Universe to include X-Men, Fantastic Four and Deadpool."
And then there were additional press statements made, saying Deadpool will remain to be as potty-mouthed as we have come to know. Or as put,
“[Deadpool] clearly has been and will be Marvel branded. But we think there might be an opportunity for a Marvel-R brand for something like Deadpool, as long as we let the audiences know what’s coming, we think we can manage that fine.”
We'll see how that pans out.
But then there are shows like The Simpsons, whose ratings have been pretty lack-luster and knowing how sharp Disney is in making a dollar, this show may not fulfill that quota any more. Industry experts expect the show to come to an end pretty soon now. No? Oh yes. Sure, present-day fans might balk, but those fans are a drop in the bucket. And if you remember, the moment they took over Lucasfilm, they ripped the Star Wars animation show right out from under Cartoon Network.
How Marvel Was Restricted By Fox Owning The X-Men Character Rights?
So one detail to note is that with Fox owning the X-Men, that ownership included mutant super powers. In other words Marvel could not have any true mutants under it's wing. If you think about it, any "mutant-like" character in a Marvel film was made by science or messing with alien technology.
With Fox's rights back in the house, they can now freely introduce true, genetic-based mutants.
With this purchase looking to take place, there's the argument that this is also related to Net Neutrality (NN) being abolished on the same day this was announced. I'm not sure that's cogent to the deal but the argument is that with NN gone and Disney finally snagging up Fox properties, they will own all the avenues of internet access to this content. And that's a huge thing. If this NN-getting-cancelled thing doesn't get repealed. And many believe it won't because our PODUS is pretty business-oriented.
But this is going down an entirely different path.
So as it stands, we may now start seeing some new films with new characters (for Disney/Marvel) and the potential improvement of these power-house comic title franchises.
It seems pretty exciting on the surface, and that's what Disney wants you to believe! So we'll more than likely run with that!
Let's Be Real About the Business Aspect of Disney Buying Fox:
Below is the detailed press release with some great verbiage of how this will all benefit you, spending more millions on their new stuff, helping them make more billions, while, yes, benefiting you! (I'm being pragmatic here. Nothing more, nothing less.) BECAUSE KEEP IN MIND, that Marvel is just one tiny piece of this pie. With this acquisition, Disney is going to have a HUGE inventory of content they will be able to offer from or restrict to, their new, upcoming streaming service.
As Peter Csathy, chairman of CREATV Media put it,
“Content is the weapon of choice in this over-the-top game. Crafty Disney can use content offensively and defensively. It can withhold its treasure trove of content and characters … from Netflix, or use some of the biggest brands in the world, the biggest franchises — Star Wars, Pixar, Marvel, now maybe X-men is another one — to its advantage.
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DISNEY PRESS RELEASE
The Walt Disney Company and Twenty-First Century Fox, Inc. today announced that they have entered into a definitive agreement for Disney to acquire 21st Century Fox, including the Twentieth Century Fox Film and Television studios, along with cable and international TV businesses, for approximately $52.4 billion in stock (subject to adjustment). Building on Disney’s commitment to deliver the highest quality branded entertainment, the acquisition of these complementary assets would allow Disney to create more appealing content, build more direct relationships with consumers around the world and deliver a more compelling entertainment experience to consumers wherever and however they choose. Immediately prior to the acquisition, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company that will be spun off to its shareholders.
Under the terms of the agreement, shareholders of 21st Century Fox will receive 0.2745 Disney shares for each 21st Century Fox share they hold (subject to adjustment for certain tax liabilities as described below). The exchange ratio was set based on a 30-day volume weighted average price of Disney stock. Disney will also assume approximately $13.7 billion of net debt of 21st Century Fox. The acquisition price implies a total equity value of approximately $52.4 billion and a total transaction value of approximately $66.1 billion (in each case based on the stated exchange ratio assuming no adjustment) for the business to be acquired by Disney, which includes consolidated assets along with a number of equity investments.
Popular Entertainment Properties to Join Disney Family
Combining with Disney are 21st Century Fox’s critically acclaimed film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000, which together offer diverse and compelling storytelling businesses and are the homes of Avatar, X-Men, Fantastic Four and Deadpool, as well as The Grand Budapest Hotel, Hidden Figures, Gone Girl, The Shape of Water and The Martian—and its storied television creative units, Twentieth Century Fox Television, FX Productions and Fox21, which have brought The Americans, This Is Us, Modern Family, The Simpsons and so many more hit TV series to viewers across the globe. Disney will also acquire FX Networks, National Geographic Partners, Fox Sports Regional Networks, Fox Networks Group International, Star India and Fox’s interests in Hulu, Sky plc, Tata Sky and Endemol Shine Group.
“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 A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. “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. 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.”
“We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry,” said Rupert Murdoch, Executive Chairman of 21st Century Fox. “Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”
At the request of both 21st Century Fox and the Disney Board of Directors, Mr. Iger has agreed to continue as Chairman and Chief Executive Officer of The Walt Disney Company through the end of calendar year 2021.
“When considering this strategic acquisition, it was important to the Board that Bob remain as Chairman and CEO through 2021 to provide the vision and proven leadership required to successfully complete and integrate such a massive, complex undertaking,” said Orin C. Smith, Lead Independent Director of the Disney Board. “We share the belief of our counterparts at 21st Century Fox that extending his tenure is in the best interests of our company and our shareholders, and will be critical to Disney’s ability to effectively drive long-term value from this extraordinary acquisition.”
Benefits to Consumers
The acquisition will enable Disney to accelerate its use of innovative technologies, including its BAMTECH platform, to create more ways for its storytellers to entertain and connect directly with audiences while providing more choices for how they consume content. The complementary offerings of each company enhance Disney’s development of films, television programming and related products to provide consumers with a more enjoyable and immersive entertainment experience.
Bringing on board 21st Century Fox’s entertainment content and capabilities, along with its broad international footprint and a world-class team of managers and storytellers, will allow Disney to further its efforts to provide a more compelling entertainment experience through its direct-to-consumer (DTC) offerings. This transaction will enable Disney’s recently announced Disney and ESPN-branded DTC offerings, as well as Hulu, to create more appealing and engaging experiences, delivering content, entertainment and sports to consumers around the world wherever and however they want to enjoy it.
The agreement also provides Disney with the opportunity to reunite the X-Men, Fantastic Four and Deadpool with the Marvel family under one roof and create richer, more complex worlds of inter-related characters and stories that audiences have shown they love. The addition of Avatar to its family of films also promises expanded opportunities for consumers to watch and experience storytelling within these extraordinary fantasy worlds. Already, guests at Disney’s Animal Kingdom Park at Walt Disney World Resort can experience the magic of Pandora—The World of Avatar, a new land inspired by the Fox film franchise that opened earlier this year. And through the incredible storytelling of National Geographic—whose mission is to explore and protect our planet and inspire new generations through education initiatives and resources—Disney will be able to offer more ways than ever before to bring kids and families the world and all that is in it.
Enhancing Disney’s Worldwide Offerings
Adding 21st Century Fox’s premier international properties enhances Disney’s position as a truly global entertainment company with authentic local production and consumer services across high-growth regions, including a richer array of local, national and global sporting events that ESPN can make available to fans around the world. The transaction boosts Disney’s international revenue mix and exposure.
Disney’s international reach would greatly expand through the addition of Sky, which serves nearly 23 million households in the UK, Ireland, Germany, Austria and Italy; Fox Networks International, with more than 350 channels in 170 countries; and Star India, which operates 69 channels reaching 720 million viewers a month across India and more than 100 other countries.
Prior to the close of the transaction, it is anticipated that 21st Century Fox will seek to complete its planned acquisition of the 61% of Sky it doesn’t already own. Sky is one of Europe’s most successful pay television and creative enterprises with innovative and high-quality direct-to-consumer platforms, resonant brands and a strong and respected leadership team. 21st Century Fox remains fully committed to completing the current Sky offer and anticipates that, subject to the necessary regulatory consents, the transaction will close by June 30, 2018. Assuming 21st Century Fox completes its acquisition of Sky prior to closing of the transaction, The Walt Disney Company would assume full ownership of Sky, including the assumption of its outstanding debt, upon closing.
The acquisition is expected to yield at least $2 billion in cost savings from efficiencies realized through the combination of businesses, and to be accretive to earnings before the impact of purchase accounting for the second fiscal year after the close of the transaction.
Terms of the transaction call for Disney to issue approximately 515 million new shares to 21st Century Fox shareholders, representing approximately a 25% stake in Disney on a pro forma basis. The per share consideration is subject to adjustment for certain tax liabilities arising from the spinoff and other transactions related to the acquisition. The initial exchange ratio of 0.2745 Disney shares for each 21st Century Fox share was set based on an estimate of such tax liabilities to be covered by an $8.5 billion cash dividend to 21st Century Fox from the company to be spun off. The exchange ratio will be adjusted immediately prior to closing of the acquisition based on an updated estimate of such tax liabilities. Such adjustment could increase or decrease the exchange ratio, depending upon whether the final estimate is lower or higher, respectively, than the initial estimate. However, if the final estimate of the tax liabilities is lower than the initial estimate, the first $2 billion of that adjustment will instead be made by net reduction in the amount of the cash dividend to 21st Century Fox from the company to be spun off. The amount of such tax liabilities will depend upon several factors, including tax rates in effect at the time of closing as well as the value of the company to be spun off.
The Boards of Directors of Disney and 21st Century Fox have approved the transaction, which is subject to shareholder approval by 21st Century Fox and Disney shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act, a number of other non-United States merger and other regulatory reviews, and other customary closing conditions.
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