Disney on Thursday announced a deal to acquire many parts of Twenty-First Century Fox for $52.4 billion in stock. The company will get Fox’s movie studios, network Nat Geo, Asian pay-TV operator Star TV, stakes in Sky and Hulu and regional sports networks.
The acquisition bolsters Disney’s plans to become a dominant streaming service platform, making it a bigger threat to Netflix.
“The more desirable content they have, the better they will be able to compete in terms of trying to sell a subscription offering at a time there’s so much competition for subscription-based services,” said eMarketer senior analyst Paul Verna.
Bob Iger will remain Disney’s chairman and CEO through the end of 2021, at the request of the board of directors of both companies. Disney emphasized the importance of Iger to integrate the acquisition, saying in a statement that “extending his tenure is in the best interests of our company and our shareholders.”
Disney announced plans in August to start stand-alone streaming services and pull its movies off Netflix starting in 2019. No price point has been set for its upcoming movie and TV plan, but the company said it will be “substantially below” Netflix’s price. Disney also will create a stand-alone ESPN digital service with access to 10,000 additional live sporting events.
Disney has said its content service will have a smaller library than Netflix. Still, it has some fan-favorite titles including its animated features, “Marvel” and “Star Wars” films. Adding Fox’s repertoire of content — which includes the “X-Men,” “Alien” and “Predator” franchises in addition to shows like “The Simpsons,” “Family Guy” and “The X-Files” — will only make it stronger.
“Both companies are so deep in terms of what they have,” Verna said. “The decision to subscribe to a streaming service often comes down to: ‘Does the content match what I, as a consumer, am interested in?'”
The deal puts Netflix in a more precarious situation because it may lose some of this content. Netflix will also have tospend more to remain competitive. However, Netflix has already acknowledged it can’t rely on other media companies’ shows and movies and is focusing on its own content. The company has projected it will spend $8 billion next year.
The Disney-Fox merger solidifies Netflix’s in-house production strategy as a smart one, Verna said. And since Netflix’s service is already established, Disney will face a stiffer battle than Netflix, Verna said: The market is already full of over-the-top video companies that offer premium content without requiring a cable or satellite subscription. It also is unclear how many of Fox’s titles Disney will get streaming rights for, as well as if it will pass federal antitrust laws.
“Would Netflix rather have all this Disney and Fox content?” Verna said. “Yes. Will they crumble as a result of not having it? I don’t think so.”
Source: Tech CNBC
Disney to buy 21st Century Fox assets for .4 billion in stock; Bob Iger to stay on through 2021