Disney announced on Thursday that it would acquire most of the entertainment assets of 21st Century Fox for about $60 billion in stock and debt, in what would be the largest-ever merger of two showbiz companies. Already the most storied entertainment empire in the U.S., Disney would become a global colossus through this deal, gaining large stakes in the biggest entertainment companies in both Europe and India. The deal will almost certainly receive regulatory scrutiny, as the Justice Department has been lately dubious of mega media mergers.
The yuletide haul includes some of the most famous properties in television and film. In the transfer of power, Disney would receive the 20th Century Fox film studio, including the independent film maestros at Fox Searchlight (Best Picture Oscar–winners include: Slumdog Millionaire, 12 Years a Slave, and Birdman), the X-Men franchise, Fox’s television production company (worldwide hits include: The Simpsons, Modern Family, and Homeland), the FX and National Geographic cable channels, and regional sports networks, including the YES Network that broadcasts New York Yankees games. Disney also acquires a majority stake in the TV product Hulu, which it may use to kickstart its entry into the streaming wars.
These additions would enrich an overflowing treasury at Disney, whose assets includes Star Wars, Marvel, Pixar, ABC, ESPN, the world’s most popular amusement parks, and, of course, its classic animated-film division. When Mufasa tells Simba in The Lion King that “everything the light touches is our kingdom,” it isn’t just memorable screenwriting. It is corporate guidance.
The deal allows Rupert Murdoch, the billionaire patriarch behind 21st Century Fox, to consolidate his own kingdom—and his legacy—around the very place where he got his start: news. Murdoch, who built his $100 billion business starting with a single newspaper in Australia, would retain ownership of the Fox broadcast network, the Fox News Channel, and several national sports networks. Like an aging King Lear dividing the spoils in his twilight years, one of the world’s most famous media moguls is selling off his accumulated fortunes.
At the deepest level, this corporate marriage isn’t about Mickey versus Murdoch, or Avengers versus X-Men. It’s all about Netflix—and, to a subtler extent, Google and Facebook, whose dark shadows extend over the entire media landscape.
Streaming video has conquered pay TV and created a generation of cord-cutters; the youngest Millennials (those in their late teens and early 20s) watch 50 percent less traditional television (“cable TV,” as it’s commonly called) than people that age did in 2010. That means every content company now has to be a streaming technology company. As eyeballs shift away from the cable bundle, advertising is following them to mobile devices, where Google and Facebook have built an impregnable duopoly. That means every ad-supported television business has to become a direct-to-consumer business.