The Walt Disney Co. will lease the Fox lot in Century City for seven years as part of the former’s pending acquisition of 21st Century Fox. Insiders told Variety that 21st Century Fox President Peter Rice informed employees of the lease agreement in a town hall meeting Thursday on the lot.
According to sources inside the meeting, Rice, president of 21st Century Fox, assured employees that no one who works on the lot would be relocated in the near future. Rice did concede that Disney will need to look at Fox’s businesses and that redundancies will be identified, leading to inevitable layoffs. But he did promise “big severance packages” along the lines of the buyouts the company offered two years ago. During those buyouts, employees were offered a month’s pay for each year they worked.
According to one insider, Rice spoke with employees for roughly an hour. The overall mood was characterized as positive, but there was also tangible uncertainty in the room.
Rice called the event “a momentous occasion,” adding, “I’ve been here for 30 years, and I never in my lifetime thought that Rupert would sell.”
On Thursday, it was announced that Disney had reached an agreement to purchase the bulk of Fox’s assets, including its television and movie studios, in a deal that values the Fox assets in the transaction at $66.1 billion, including $13.7 billion in 21st Century Fox debt, or $28 a share. The deal was unforeseen until rumors surfaced this fall that Fox chief Rupert Murdoch had begun entertaining the notion of selling off his company’s entertainment properties
“In uncertainty, there’s change, and in change, there’s opportunity,” Rice told employees. He said the new combined company would generate $20 billion a year in profits, which will allow it to “compete with the Amazons of the world.” He also dismissed the notion that the two companies were joining to challenge Netflix, noting that Netflix loses $2.5 billion a year. Rice also said the new Fox entity will only do business in the U.S. and will generate $3 billion a year.
Rice did not address how Fox Broadcasting, which is remaining in the slimmer 21st Century Fox alongside the company’s news assets and Fox Sports 1, will source content. However, insiders tell Variety that rumors abound on the lot speculating that profits from the sale to Disney could be used to buy a new studio.
Rice also predicted that the deal would take 12-18 months to close and emphasized that there would be no short-term effect on business operations.
As for pending approval of the deal from federal regulators, Rice told those assembled, “The lawyers believe it will pass.”
Other Fox television executives, including Fox Television Group co-CEO Dana Walden and FX Networks CEO John Landgraf also addressed staffers at the meeting. Stacey Snider, the head of Fox’s film division, has canceled a trip to Washington D.C. for the premiere of the film “The Post.” She has stayed in Los Angeles for a series of small meetings with employees to discuss the Disney deal, and is maintaining what one insider described as extended “office hours” with the door to her office left open.
Her message was: “We’re aligning with one of the world’s greatest companies, whose goal is to enable us to reach more people with more variety of content, which is great news and a huge opportunity for us. They also are going to enable us to continue doing what we love.”
On the film front, employees are being told that films are still being greenlit and that production on such major upcoming releases as “Gambit,” an X-Men spinoff, is expected to still commence in the coming months.
Like Rice, Snider has stressed that over the next year and a half until the deal closes, it will be “business as usual” and she told staffers that she expects them “to do what we do at a high level of excellence and with our typical swagger.”