The Walt Disney Company has agreed to buy key media assets owned by Rupert Murdoch’s 21st Century Fox for US$52.4 billion in stock.
Disney will take ownership of 21st Century Fox’s film and television studios, cable entertainment networks and international TV businesses.
Before the buy-out, 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.
The deal expands Disney’s direct-to-consumer offerings as it invests in content and distribution to compete with the likes of Netflix. Disney also gets Fox’s stake in Hulu, which it already owns 30 per cent of, giving it a controlling stake in the streaming service.
With ownership of Fox Networks International, which has more than 350 channels in 170 countries, Star TV in India and a 39 per cent in UK-based Sky News, the deal greatly enhances Disney’s international footprint.
The acquisition is still subject to approval from US anti-trust regulators, as well as the Department of Justice which recently sued to block the AT&T-Time Warner deal.
Under the terms of the agreement, Fox shareholders will receive 0.2745 Disney shares for each Fox share they hold.
“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 Bob Iger, Chairman and CEO of The Walt Disney Company.
At the request of both boards Iger has agreed to continue as chairman and CEO of Disney through the end of calendar year 2021, instead of 2019.
“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.”
The deal gives rise to a new movie powerhouse. As the chart below from Statista illustrates the merged company will have a combined domestic box office market share of 28 per cent and will be nearly twice as large as its strongest competitor Warner Bros.