-Cnet
The Walt Disney Co. agreed on Thursday to buy major parts of 21st Century Fox in a $54.2 billion deal, a dramatic example of Hollywood companies joining forces amid growing competition from digital powerhouses, like Netflix and Amazon.
The deal includes the 21st Century Fox film and television studios, as well as a cable group that comprises FX Networks, National Geographic, 300-plus international channels and 22 regional sports networks, including Sky in the UK and Australia. It also doubles Disney's stake in video-streaming service Hulu to 60 percent, putting a question mark over the future for one of the main US streaming video services.
The total deal is worth $66.1 billion, but that includes $13.7 billion of debt.
The combination solidifies Disney's position as the world's biggest traditional media company, bringing Fox's popular X-Men, Deadpool and "Planet of the Apes" franchises to a company that is already home to Marvel, Star Wars and Pixar's stable of animated films. The combined company will also own the Mickey Mouse and Simpsons characters.
"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 Disney CEO Bob Iger in a statement.
Disney announced that Iger has extended his contract with the company until the end of 2021 in connection with the deal.
The consolidation creates a Hollywood powerhouse with the resources to battle deep-pocketed tech companies like Amazon and Netflix. Those companies have eye-popping budgets that pour money into growing and well-respected media production.
In August, Iger said Disney would end a deal that gave Netflix its most-popular movies and would instead launch its own streaming-video services. One of the services would provide film and television entertainment, while the other would feature sports, including Disney's ESPN service. Adding Fox's programming will create a bigger and more competitive streaming library.
Iger and Murdoch pose together in London.
Disney
"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.
The deal touches on other 21st Century Fox properties as well, with a 50 percent stake in TV production company Endemol Shine; and the addition of the Star India Satellite Service. The company is currently attempting to increase its 39 percent stake in European broadcaster Sky to full ownership, pending scrutiny by regulators in the UK, where Sky is the second biggest broadcaster after the BBC. Should the deal go through, Disney will buy the whole of Sky.
Disney is betting that greater control over digital distribution will help it better compete with digital video services that are growing quickly, especially among young viewers. It expects to launch its streaming services next year.
"Even a giant like Disney has not been immune to changing behavioral patterns as consumers have embraced new ways of watching TV shows and movies," said Paolo Pescatore, vice president of multiplay and media at analyst firm CCS Insight.
"The move will firmly establish Disney as one of the leading media companies in the world and puts it in a great position to compete head on with the threat posed by the web providers such as Amazon and Facebook," he said.
The deal still needs the approval of regulators and of Disney and 21st Century Fox shareholders.
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