For Rupert Murdoch, the sale of 20th Century Fox, FX Networks, and other jewels from his empire is a recognition that the market has spoken. Twenty-First Century Fox’s entertainment assets will be more valuable in the long run if combined with Disney’s industry-leading content production behemoth.
The $52.4 billion deal is seen as a turning point for the entertainment industry as Disney bolsters its operations to stay competitive in a marketplace that has changed enormously during the past few years as consumers flock to on-demand and streaming platforms. The only certainty of the coming few years is that the evolution of content production, distribution, and consumption will evolve in directions that are far afield from the traditional profit centers of film and TV.
Iger told reporters Thursday after the deal was unveiled that the Fox acquisition will enhance Disney’s operations in the three key areas — content, technology, and international — that he identified as crucial for the company’s health when he took the job of CEO in 2005.
“This acquisition essentially checks each of those boxes,” Iger said. “It moves us into each of those spaces in a far more compelling and accelerated way.”
Iger emphasized the importance of Fox’s international TV profile — with 300-plus channels in Europe, Asia, and Latin America and the Star India satcaster — and the technology platform that Sky has developed. Iger is on the hunt for muscle to allow Disney to go it alone as an OTT distributor as the MVPD world struggles to adapt to changing consumer viewing habits.
Scooping up prime assets from the Murdoch empire has the potential to be a crowning achievement for Iger, who has extended his contract as Disney CEO for a third time, through 2021, in order to oversee the integration. Iger’s legacy has been defined by his deft touch at bringing gold-plated properties into the Magic Kingdom, from Pixar in 2006 to Marvel in 2009 to Lucasfilm in 2012. Indeed, the mega merger agreement with Fox was announced just hours before Disney unleashes its latest theatrical blockbuster, “Star Wars: The Last Jedi.”
Murdoch, meanwhile, also made reference to his legacy in a separate conference call with Wall Street analysts. Noting that his company “started decades ago with a single newspaper in Adelaide, Australia,” he described the sale to Disney as an effort to better “unlock the potential” of the assets his company has long nurtured.
Murdoch, of course, is used to being on the buying side of the equation when it comes to M&A activity. He barreled into the U.S. entertainment business in the early 1980s, making investments in studios and TV stations that led him to eventually take over 20th Century Fox and launch Fox Broadcasting Co. in 1986.
The 86-year-old mogul sounded a little defensive as he talked up the company’s plans for proceeding with the remaining 21st Century Fox assets, primarily Fox Broadcasting, the 28 TV stations, and the Fox News and two national Fox Sports channels. The Murdochs will also hang on to the sprawling 20th Century Fox lot in Century City, although there is already speculation that some or all of the property could be sold off.
He noted on the call that there’s been much discussion of “are the Murdochs retreating?” during the six weeks since rumors of the Disney acquisition surfaced. Murdoch and his sons, 21st Century Fox CEO James Murdoch and executive chairman Lachlan Murdoch, talked up the new Fox’s growth potential with a tighter focus on live news and sports content.
“Absolutely not,” Rupert Murdoch said of speculation that Fox will get out of the game entirely. “We are pivoting at a pivotal moment.” The time has come “to launch the next great leg of our journey,” Murdoch said. “The world of media has obviously been undergoing rapid change. New technologies, competitors and shifting consumer preferences have redrawn the whole media map. …We are paving the way for the new Fox.”