The Disney- Fox Merger: Where is this leading and how?

RTIwala Trending: There have been talks that are going on about a major Disney and 21st Century Fox merger. The Disney and Fox deal would sell “most of” 21st Century Fox to the Walt Disney Company. The broadcast network or its sports programming won’t go to Disney. It’s to be noted that Disney already owns ABC and ESPN, making similar acquisitions is possibly illegal. This acquisition has apparently been discussed “on and off” for weeks and is currently inactive. It is anticipated as one of the world’s biggest mergers if it happens.

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RTIwala Trending Disney-Fox Merger
(Image Source: Wikipedia)

The merger would focus on Fox’s film studio, smaller cable channels like FX and National Geographic, and international assets like Sky TV. Disney is head and shoulders above everyone else in the film industry market. It reported profits of $2.5 billion in 2016 and made five of the 10 most successful films of the year (including the top three). The company owns Lucasfilm, Marvel Studios, and Pixar. It is already making almost $1 billion more than its next biggest rival! That figure casts the news of its reported interest in acquiring Fox in an even more overwhelming light. It would amount to a merger of the first and third biggest movie studios. It would result in a potential monopoly. It could be deemed as illegal.

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The Disney-Fox Duo

What’s worrying is that Disney is already focused on making films on the largest scale possible. It has left a little room for the kinds of mid-budgeted dramas and comedies that used to blossom in Hollywood. If Fox were subsumed, that would leave Disney with only four major rivals: Warner Bros., Paramount, Universal, and Sony. All these companies rely on revenue from other sources (mainly television) to make money. Disney/Fox would be a corporate monolith like no other. It will have an even larger stable of superheroes to throw around.

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It seems that Fox believes that Disney is the only company with the “scale” that Fox has in mind. The kind of limitless funds with Disney can compete with expected future rivals like Amazon, Google, and Netflix. This line of thinking may seem a little strange coming from Fox. Fox is the company that distributed the most successful film ever made- Avatar. Fox owns the rights to the X-Men franchise, which has been a solid earner for almost 20 years.

But this rumored sale underscores something fear-provoking about the direction of the industry: Even Fox, with all its resources, is looking at the increasingly expensive future of moviemaking. Last year, CEO James Murdoch criticized an entertainment-industry approach to mergers and acquisitions that seems to value “scale for scale’s sake.” If Fox can’t slash it anymore, it’s hard to imagine how Universal Sony and Paramount will manage, given that they already devote much less revenue to filmmaking.

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What is the Future of Hollywood Now?

The answer to lower profits may be in scaling back and focusing on smaller-budgeted movies. Get Out and Split earned Universal hundreds of millions in 2017. A major flop like Monster Trucks harms a studio’s bottom line so much more because of the inflated budget. Paramount took a $115 million write-off in 2016 for the losses. Most important of all is stock values. Disney’s stock immediately rose when rumors of the Fox purchase swirled.

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For now, the Disney-Fox deal appears to be in a holding pattern. Fans waiting for an Avengers vs. X-Men movie will have to wait and see. The very idea of such a merger would have seemed ridiculous just a decade ago. At that time, Disney’s biggest franchise was Pirates of the Caribbean before it had bought Lucasfilm outright and started making a Star Wars movie every year. Hollywood is changing quickly and competition from Amazon and Netflix are only going to speed things up. Studios are realizing they’ll have to adapt to survive, even if it means joining forces with former rivals or tech giants. It would be interesting to see what comes up in this direction.


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