After nearly two years of anticipation due to a range of problems including regulations and a bidding war with Comcast, Walt Disney Company completed its $71 billion acquisition of 21st Century Fox assets. This post will discuss the merger between Disney & 21st Century Fox, why it was such a huge event and the ongoing discussion surrounding outcomes.
The deal was a gamechanger due to its inclusion of ‘the 104-year-old 20th Century Fox studio, the FX and National Geographic cable networks, and an additional 30 percent of subscription streaming service Hulu (Disney already held a 30 percent stake before the acquisition)’.[1] The importance of the deal has been widely reinforced by various commentators including AdWeek’s Jason Lynch describing it as one of the most “massive transformations” ever seen in the industry and Vox Media claiming “It’s hard to overstate what the closed deal means…in this era of ever-accelerating media consolidation, the implications of this deal are pretty staggering”.[2]
Arguably, one of the most notable criticisms of the merger originated from concerns about a monopoly as the deal contracted the number of significant Hollywood firms from six to five. The consolidation of this power in the industry has generated fears that Disney may be able to drive up prices for its services, have too much power in the box office and be able to dictate what is seen in the media to an unreasonable extent. Disney’s reputation for focussing on big-budget films was widely criticized during the build up to the merger in combination with controversies including the attack on the LA times for ‘the publication’s investigation into the company’s business dealings in its Anaheim, Calif. theme parks, blacklisting LA Times critics out from all screenings of Disney films… and John Lasseter thrived for years in a system that aided his sexual harassment of female employees’.[3]
Beyond the concerns addressed by critics, the merger itself was anything but a smooth transition due to core cultural discrepancies. The differences in corporate cultures are characterized by Fox being generous and Disney being very conservative with their corporate titles. Salary structure was also not in coherence as ‘on average, Fox’s TV executives are paid at least 20% more than their Disney counterparts’.[4] The topic of salary remains a particularly important aspect of the merger in current circumstances due to the recent announcement: ‘shockwaves went through the film and TV community this morning when Disney, one of the biggest media companies in the world, became the first entertainment conglom of that size to implement massive pay cuts related to the ongoing coronavirus pandemic’.[5] The cut was driven by the virus resulting in Hollywood production being shut down, releases on hold and amusement parks closed. CEO Bob Chapek maintained that the cuts will remain in place until there is a substantial recovery in business. This turn of events is noteworthy due to expectations of performance when the deal was initially closed. Onlookers expected the deal to give Disney the capacity to ‘aggressively compete with Netflix, its ever-growing rival’.[6] However, recent unforeseeable circumstances have made that possibility increasingly unlikely.
[1] ‘Mergers & Acquisitions Special Edition: The Disney / Fox Acquisition’, (2019). https://mediaradar.com/blog/disney-fox-acquisition/
[2] ‘Mergers & Acquisitions Special Edition: The Disney / Fox Acquisition’, (2019). https://mediaradar.com/blog/disney-fox-acquisition/
[3] ‘If Disney Buys Fox: The Pros and Cons of the Potential Acquisition’, (2017). https://www.slashfilm.com/disney-buys-fox-pros-and-cons/
[4] Nelliei Andreeva, ‘Disney-Fox TV Exec Structure: Big Titles Galore, Studio Merger Put Off Amid Challenges Blending Corporate Cultures’, (2018). https://deadline.com/2018/10/disney-fox-dealtv-executives-analysis-culture-clash-1202473873
[5] Nellie Andreeva, ‘Disney’s Executive Pay Cut Threatens To Deepen the Divide Between The Two Sides Of The Merged Company’, (2020). https://deadline.com/2020/03/disneys-executive-pay-cutthreatens-deepen-the-divide-between-two-sides-of-merged-coimpany-disney-fox-1202896256/
[6] ‘Mergers & Acquisitions Special Edition: The Disney / Fox Acquisition’, (2019). https://mediaradar.com/blog/disney-fox-acquisition/
Financial Institutions 1850-2020 