It’s been coming for a while: the Disney takeover of Fox is finally here. Under an incredible $71 billion deal that’s been in the works since 2017, Disney will own 30 percent of Hulu, 20th Century Fox, and the Fox Television Group — dramatically increasing its market share. All of this is going to lead to some interesting changes in the movie, television and streaming services industries.
Disney has always been a prominent presence in our media, but that presence is about to explode — leaving consumers and investors alike with a lot of questions. Let’s take a look at what could be next for the multimedia juggernaut.
A Question of Monopoly
Disney’s has been working on its deal with Fox for some time, but there have been some major concerns levied by regulators regarding the potential for monopoly. There are only five or six major companies producing the vast majority of motion pictures and television shows. This has raised some questions about how mega-corporations are being treated in the current market, and whether mega-corporations have a harmful influence on the market.
Despite these concerns, the acquisition will be moving forward by March 20th. Disney has not yet outlined its plans for the Fox brand, but given the overlap between Fox and Disney, there may be some significant changes.
The Industry Consequences of the Takeover
There are some major concerns regarding this takeover, from both a consumer and an investor standpoint. From a consumer standpoint, this level of media consolidation is never good news: it leads to fewer interesting projects and more mainstream productions. From an investor standpoint, it puts a lot of the larger media companies in flux.
Following this transition, Disney will own franchises such as This Is Us, American Horror Story, Fresh off the Boat, X-Files and Buffy the Vampire Slayer. This is in addition to acquiring more of the Marvel franchise. Consumers may never notice these changes apart from seeing that shows move from one streaming service to another streaming service. In terms of major motion pictures, things may carry on invisibly.
Yet by purchasing Fox, Disney has consumed a significant amount of its competition. It’s possible that Fox TV itself may be slowly phased out, and the competition may not be able to withstand the expansion of what was already a monolithic empire. There are now just a handful of companies within the market, and these companies are going to be nowhere near the size of the combination of Disney and Fox media.
In particular, streaming services may be concerned about the future. Disney now owns a significant amount of Hulu, and they are also launching their own streaming service later this year.
What’s Coming for 20th Century Fox?
20th Century Fox is likely to be the most impacted during this transition. The company is likely to see some significant layoffs as individuals are made redundant in addition to culture changes as they are absorbed into Disney. It’s estimated that about 5,000 individuals will likely be laid off, both from Disney and Fox as the company seeks to reduce inefficiencies. Those who work for 20th Century Fox may want to start dusting off their resumes.
There are some exceptions to Disney’s scope. Disney didn’t acquire all of Fox: Fox News, Fox Sports, Fox Broadcasting and the Fox Television Stations Group are going to remain part of the Fox Corporation. Fox still lives, just not a lot of it. The future of 20th Century Fox is a little more uncertain; it could be completely dissolved by Disney, or it could have its brand and identity preserved. Either way, Disney is now extraordinarily powerful in the realm of media, owning a vast majority of movie franchises, as well as a chunk of streaming services.
The Future of Disney
With all other fundamentals being solid, Disney looks as though it’s about to consolidate a lot of power. But that doesn’t necessarily mean it’s a good investment or that it’s in a good place, especially with the expensive deal. A large concern is whether the Disney streaming service is going to perform well. Now, Disney’s streaming service will be competing directly with itself, as it does own a substantial portion of Hulu.
Disney+ streaming is expected to launch sometime in 2019, and the success of its new streaming service may be a major indicator regarding the company’s current strategies and its potential for continued, aggressive growth. As it stands, Netflix remains a strong contender within the market, with more users than both Hulu and Amazon streaming services.
Regards,
Ethan Warrick
Editor
Wealth Authority
