Disney gets revision of terms, avoids litigation
HOLLYWOOD — Disney’s acquisition of Fox Family Channel from News Corp. and other current owners is expected to close within a few days, following an agreement to shave $100 million from deal’s cash costs.
Mouse House now will pay $2.9 billion and assume more than $2 billion in debt to get the basic-cable web, insiders said Tuesday.
Disney asked for a review of terms amid economic fallout from the Sept. 11 terrorist attacks. The entreaty came as the Mouse absorbed big advertising losses at its existing TV operations and Disney shares sank to their lowest levels in years.
But because the Fox Family deal is mostly cash-based and a definitive agreement was struck in July, it appeared the Mouse could exit the deal only through litigation — with News Corp. then likely to countersue to close the transaction.
“This revision of the terms avoids litigation,” a party close to the situation said. “I think the deal now will close this week.”
It’s believed Disney reps met recently in Los Angeles with News Corp.’s Peter Chernin and others to tinker with deal terms.
Sydney-based News Corp. and Los Angeles-based Saban Entertainment each hold a 49.5% stake in Fox Family, and investment bank Allen & Co. owns 1%. News Corp. is particularly anxious to finalize the sale of the cable web, as conglom topper Rupert Murdoch separately has been negotiating to acquire DirecTV parent Hughes Electronics and could use the cash infusion to bolster that campaign.
Topper Michael Eisner repeatedly dismissed press speculation that Disney was looking for a way to bail from the Fox Family deal after Mouse stock tanked in mid-September. But a Disney spokesman finally acknowledged last week the conglom was “reviewing” the deal in light of recent news events.
Advertising was slumping at broadcast and cable webs even before the September tragedies further shook consumer confidence and accelerated the U.S. economic downturn. But in the end, it appears Disney had little wriggle room in its definitive agreement.
Fox Family reaches 80 million U.S. homes and 30 million internationally. Disney plans on rebranding web as ABC Family Channel and programming it partly with shows recycled from its ABC broadcast network.
Disney shares closed down 3¢ at $18.52 on Tuesday.