Disney announced its acquisition of a major portion of 21st Century Fox this morning in a deal that dramatically remakes the entertainment landscape and positions the media giant for the future.
The deal, officially valued at $66.1 billion including assumption of debt, will create an entertainment colossus that expands Disney’s footprint in every area and is set to be the biggest deals ever done in decades. The agreement encompasses Fox’s prolific film and television studios, its FX and National Geographic cable networks, Fox’s regional sports networks, its 39% stake in UK satellite television provider Sky and its international cable networks, including Star India. It also includes one of the most coveted film libraries in the game — something that will be important as Disney pursues its ambitions to become a streaming media giant that challenges Netflix and forges direct relationships with consumers.
Disney is paying $52.4 billion in stock for Fox assets in an all-stock deal that would leave Fox investors owning a 25% stake of Disney. Fox’s shares closed at $32.75 yesterday. The deal gives Fox shareholders 0.2745 Disney shares for each Fox share they own.
In an interview on ABC’s Good Morning America, Disney CEO Bob Iger said the deal will give Disney a “much larger international footprint” and enable it to “use cutting-edge technology and we know how important that is in this world.”
Iger will stay in his role through the end of 2021, Disney said.
Disney will discuss the deal in a conference call with investors at 5 AM PT. Fox will conduct a call an hour later.
The deal doesn’t include Fox News, the broadcast network or local stations, or the studio’s 50-plus acre lot in Los Angeles (though Disney may lease offices on the Century City lot because there’s not enough space in Burbank). Insiders expect the remaining Fox assets to eventually merge with News Corp, whose holdings include the Wall Street Journal, the New York Post and the Times of London. Though that combination won’t occur immediately.
Disney agreed to pay a $2.5 billion breakup fee to Fox if the deal gets blocked by federal regulators, according to regulatory filings.
The sale represents a dramatic about-face for Rupert Murdoch, who spent decades building a media empire through global acquisition. James Murdoch, who friends say has grown increasingly unhappy with the triumvirate of executives running Fox, plans to leave the family business to join Disney, possibly as head of television. In the GMA interview, Iger said Murdoch would be involved in the transition for a period of months and the two would be talking about “whether there’s a role” for the scion in the combined entity.