News Analysis: Disney-Fox Merger to be a game-changer for Hollywood

Source: Xinhua| 2019-03-21 06:25:28|Editor: Mu Xuequan
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by Julia Pierrepont III

LOS ANGELES, March 20 (Xinhua) -- After maneuvering past the thorny U.S. Department of Justice's potential anti-trust issues and Mexico's reluctant regulatory approval, on Wednesday night, the 71.3 billion U.S dollars acquisition of 21st Century Fox assets by the Walt Disney Company was a done deal.


It is also likely to mark a new era in Hollywood as the Big Six is whittled down to the Big Five, multi-national conglomerates are jockeying for position and speculation runs high as to who will be the next to be culled from the herd.

This and the recent AT&T-Time Warner merger deals would have been unthinkable in the highly-regulated, anti-trust era of the early 1900s, and their impact may take years to be fully felt.

Some analysts are already suggesting possible outcomes, including The New York Times, which cited as potential issues that, "Disney could force smaller studios to merge as they scramble to compete. It will have greater leverage over theater owners when it comes to box office splits. And Disney's plans to use Fox content to forcefully move into streaming could slow the growth of Netflix."

Certainly AT&T's much touted promise to keep their prices competitive once it merged with Time Warner was quickly broken with a 10 U.S. dollars per month increase, increasing consumer speculation about what other rate hikes lie ahead.


Disney, the second largest entertainment and media conglomerate in America, after Comcast, already owns immensely valuable intellectual properties in the form of Marvel Studios, Lucas Film and the Star Wars and the Indian Jones franchises, and Pixar Animation Studios.

But it went gunning for Fox to pump up its film, TV and international sectors even more, and give it the ammunition and content it needed to face off against their formidable competitors.

The combined war chests of Twentieth Century Fox, Fox Searchlight Pictures, and Fox 2000 film production studio, FX Networks, and Fox Networks Group's Fox Television Group, Fox Cable Nets, Fox Sports Media Groups, Fox Networks Digital Consumer Group, and National Geographic Partners, chock-full of valuable IP, are worthy ammunition indeed.

Prior to the merger's completion, Disney CEO, Bob Iger said "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."

And that "stellar collection of businesses" holds multi-billion dollar global franchises like "Avatar", "X-Men", "Fantastic Four", "Deadpool", "Planet of the Apes", "Alien", "Predator", "Die Hard" and "Independence Day", as well as prestige, Academy Award-winning films like "Shape of Water" and "The Favorite" and hit TV shows like "The Simpsons", "Empire," "The X-Files," "American Crime Story," "American Horror Story," and "Atlanta," as well as the National Geographic Network.

Fans have been hoping the merger will mean that Disney will be getting the band back together, for example, bringing the X-Men back into the Marvel Cinematic Universe, a long held dream of Marvel superfans.


Another element of Disney's acquisition strategy stems from its plan to make a game-changing foray into the highly-profitable streaming content service for entertainment and sports programming.

To do so, in addition to their own formidable library of content, Disney needs to lure more branded talent, profitable production companies, and cable nets under their banner to provide them with a continuous supply of quality content and serves as growth engines for decades to come.

Other Big Boys in the block like AT&T and Comcast will be doing just that as they race to stake their claims to smaller, but valuable content providers.

With so many of the leading IP franchise now firmly under the Disney banner, it may force the studios to look internationally for exciting new stories with global appeal.

Plump from raiding the Fox house, the "bigger badder" Disney wolf will now be in an excellent position to build a streaming service that could give Netflix a run for its money, especially with Fox's additional 30 percent stake in Hulu under their belt, bringing Disney total to 60 percent, giving it majority control.


Adding to Disney's profitability and global reach will be Fox's Networks Group International, which operates across Europe, Latin America, Africa and Asia; the Indian television broadcaster, Star India/Tata Sky, and Endemol Shine Group.

Iger, who staked his legacy on successfully pulling off the massive Fox acquisition, shared his excitement about this opportunity to significantly increase Disney's "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." he said.

A condition of the merger was the spinning off of the Murdoch family's "new" Fox Corp, which means four major TV news networks will still exist in the United States, as will Fox's slant to the far right, losing no time in appointing former Republican House Speaker, Paul Ryan, to their board.

Rupert Murdoch, executive chairman of 21st Century Fox told the press that he and the company are proud of all that they've built at 21st Century Fox.

"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."

But this largesse for Disney shareholders comes at a very high price - with cost-cutting of up to 2 billion U.S. dollars looming ahead, post-merger, industry analysts estimate 4,000 employees from both companies will likely get the ax soon after the merger, with up to another 10,000 potentially to follow.