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Disney to buy Fox as Hollywood girds for digital showdown

The world's largest traditional-media company will buy swaths of 21st Century Fox as it preps for battle with streaming media giants like Netflix and Amazon.


The X-Men franchise is among the 21st Century Fox assets that Disney will collect in its deal. 

21st Century Fox

If "Avengers vs. X-Men: The Synergy Wars" ends up at a theater near you, here's why the movie was made.

The Walt Disney Co. signed a deal on Thursday to buy major parts of 21st Century Fox in a $52.4 billion all-stock deal. It's a dramatic example of Hollywood companies joining forces amid growing competition from digital powerhouses like Netflix and Amazon. 

Now Playing: Watch this: Mickey Mouse buys Fox

The deal covers 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. The agreement also includes broadcasting giant Sky in the UK and Europe. In addition, it doubles Disney's stake in video-streaming service Hulu to 60 percent, putting a question mark over the future of one of the main streaming video services in the US. 

The total deal is worth $66.1 billion, but that includes $13.7 billion of Fox's debt.

The combination will solidify 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. 

"This acquisition reflects a changing media landscape increasingly defined by transformative technology and evolving consumer expectations," Disney CEO Bob Iger said in a call with investors and analysts. "Today's empowered consumers want more: more compelling, high quality entertainment, more access to content, more choice and more convenience."

"May the Force be with us all," he added to close the call.  

Disney announced that Iger has extended his contract with the company until the end of 2021 in connection with the deal. The agreement still needs the approval of regulators and of Disney and 21st Century Fox shareholders. Assuming those approvals, Disney expects the deal to close in 12 to 18 months. 


Disney CEO Bob Iger (left) and 21st Century Fox Executive Chairman Rupert Murdoch pose together in London.


The consolidation will create 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 offer film and television entertainment, while the other would feature sports, including Disney-owned ESPN. Adding Fox's programming will create a bigger and more competitive streaming library. 

Iger indicated that the expanded Disney company isn't necessarily interested in building a so-called "Netflix killer," a giant streaming service that theoretically would roll together Hulu, Fox's assets and Disney's planned entertainment and sports streaming services. 

"Obviously there will be an opportunity for consumers to buy [the company's streaming services] in their entirety, but we believe that the best way to serve the consumer is to let them be choosy," he said. 

He indicated that Hulu would become the likely home to more adult-focused programming, while the planned Disney-branded service would become a hub for Disney, Pixar and Marvel family fare. 

With Disney becoming Hulu's controlling shareholder, the company can "flow more content" to the streaming service, he said, adding that Hulu's management would become "a little more clear, a little more efficient, a little more effective." Currently, Disney holds an equal 30 percent stake alongside both Fox and NBCUniversal parent Comcast, with Time Warner owning 10 percent.

The deal will also create a "New Fox" by spinning off the Fox News and Fox Business cable networks, the Fox broadcast channel and several Fox Sports properties into their own company.

"Are we retreating? Absolutely not. We are pivoting at a pivotal moment," Rupert Murdoch, executive chairman of 21st Century Fox, said on a separate call with investors and analyst. 

The deal touches on other 21st Century Fox properties, including Star India Satellite Service and the 50 percent stake in TV production company Endemol Shine. 21st Century Fox is currently attempting to increase its 39 percent stake in 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.

Rather than threatening Netflix, the combination of Disney and Fox could have an unexpected benefit to all tech companies spending big on entertainment, according to BTIG analyst Rich Greenfield. That's because it could shake loose some top Hollywood execs for the poaching.

"The executive dislocation caused by the integration of two major Hollywood studios ... should enable the major tech platforms to acquire talent far faster than would otherwise be possible," Greenfield said in a note ahead of the deal. "Look for Amazon, Apple, Facebook, Google and Netflix to pursue executive talent at both Disney and Fox."

Additional reporting by Katie Collins.

First published, Dec. 14 at 4:15 a.m. PT.
Correction, 5:50 a.m. PT
: This story initially misstated the acquisition stock value. The correct figure is $52.4 billion. 
Update, 6:40 a.m. PT: Adds executive comments from conference calls, further detail, analyst comment. 

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