ByTom Bacon, writer at
I'm a film-and-TV fan who grew up with a deep love of superhero comics! Follow me on Twitter @TomABacon or on Facebook @tombaconsuperheroes!
Tom Bacon

Disney shocked the world by purchasing the entertainment assets of 21st Century Fox for $52.4 billion. (Fox will retain control of Fox News, Fox Business and Fox Sports.) The internet has buzzed with excitement about the potential merger ever since the rumors broke last month, but negotiations had seemed to be stalled. It's the most dramatic restructure of the film and TV industry in decades.

Film fans are excitedly wondering what this means for their favorite superheroes, as the X-Men and Fantastic Four film rights will revert to Marvel. But that's almost certainly a side benefit to Disney for the deal, rather than the main focus. Why were Disney and Fox really interested in these negotiations?

The Disney Perspective

Let's begin with Disney. The House of Mouse is currently planning to reorient itself towards the digital marketplace. In 2019, Disney will release a brand new streaming service, one that will contain the entire Disney library. As a result, Disney has already announced that their content will be pulled from Netflix when their current contract expires.

Disney's fundamental goal is to ensure this new streaming site has as much content as possible. They aren't just interested in Fox's current properties; their eyes are set on the 21st Century Fox Vault. As businessman Mike Kelly told The Wrap:

"All the media companies that used to make their money by licensing their content to other people. Now they’re realizing they have the opportunity to go directly to consumer. They’re being pushed in that direction. I think Disney looks at it as a way it can increase its catalog and it can bring more value to streaming services."

Imagine a single streaming site containing everything ever made by Disney and 21st Century Fox. It would be a library so vast that even Netflix would move to second-place.

Meanwhile, there are other additional benefits too. Although Disney owns Lucasfilm, Fox owns distribution rights to the Star Wars Original Trilogy until 2019. Significantly, because Fox co-produced and co-funded A New Hope, Disney could never gain the rights to the first Star Wars movie. That left a Death-Star-sized hole in Disney's streaming plans. Imagine a Star Wars library without A New Hope.

Disney will now gain a new, experienced studio house (including film rights to the X-Men and the Fantastic Four), and what CNBC calls "significant TV production assets." Notably, these assets are also international in nature, giving Disney a stronger global footprint.

The Fox Perspective

On Fox's side, the deal is set against an intriguing backdrop. The company owns 39 percent of the UK broadcaster Sky, and has been trying to gain full control, so this deal could transform the British news landscape, not just the Hollywood landscape. As the Financial Times noted:

"There is little doubt that a Fox-Sky merger would create a monster. Despite the spin-off of their newspaper holdings, the Murdoch family still exert common control through substantial stakes in their TV and press ventures, which include the Sun, Times and the Sunday Times titles. Should Fox get control of Sky, they would control the dominant UK news producer across television, radio and print."

In what was widely seen as an attempt to ease these concerns, Fox actually closed Fox News in the UK earlier this year. However, the bid for full control of Sky has come under ever-increasing degrees of political scrutiny; it's currently been referred to the UK's Competition and Markets Authority, and the odds don't look good. As Sky itself reported on the Disney deal:

Fox has been trying to buy full control of Sky for the last year and the proposed £18.5bn takeover, which was launched just over a year ago, is currently being scrutinised by the Competition and Markets Authority.

Fox said it expected that deal to be completed by the end of June next year.

Disney would then eventually own the whole of Sky.

According to Sky, both EU and U.S. government regulators will have to approve the bid as well, which could be difficult. Either way, it's Disney's headache now.

Ultimately, Fox — unlike Disney — just didn't possess sufficient scale to capitalize on both its film and broadcast divisions in a digital age. The only way to continue increasing the scale of its sports and news operation was a corporate restructure, with a slimmed-down leadership focused on these areas.

It's fascinating to take a look behind the curtain and assess the business reasons behind headline-making deals like this one. While film fans speculate as to the impact on their favorite franchises, the reality is that these two companies are looking far beyond the X-Men and the Fantastic Four. We'll see Disney's digital offering become even more significant than anyone expected, while Fox will be able to focus on increasing their news and sports coverage.

[Sources: CNBC, Financial Times, The Wrap, Sky]


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