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Fox Studio Quickly Fades Away as Disney Starts Work on Integration

In the waning days of 21st Century Fox, there was a run on the searchlight.

As Disney neared the completion of its $71.3 billion acquisition of 21st Century Fox, employees on the Fox lot rushed into the studio’s gift shop to pick up mugs, shot glasses, sweatshirts, hats and T-shirts emblazoned with 20th Century Fox’s iconic logo of two darting searchlights cutting through a starry sky. Staffers wanted something tangible to memorialize the historic era that ended two minutes after midnight Eastern Time on March 20, when Disney took possession of the studio’s keys. The day before had marked the birth of Fox Corp., the Murdochs’ new company housing the Fox assets that Disney didn’t buy.

Employees who drove through the Motor Avenue gate on March 20 were greeted by a huge banner declaring “Welcome to Fox” with Fox Corp’s new logo — one that doesn’t include searchlights. Even the shuttles that run between the studio lot and the nearby Westfield mall had been rebranded. Instead of the 20th Century Fox movies they typically hawked, they too were outfitted with the Fox Corp. logo. And the studio gift shop was stocked with new Fox Corp. items.

The magnitude of the Disney-Fox merger was reinforced in so many ways as the grueling work of the integration began in earnest.

On March 21, dozens of 21st Century Fox executives were given pink slips in the first wave of what is expected to be as many as 4,000 layoffs across the units Disney acquired and at Fox Corp.

The layoffs are the human toll of the merger designed to fortify Disney and help it stay competitive in the fast-changing media and entertainment marketplace of the future. Disney has pledged to achieve $2 billion in synergy savings by 2021. There is no question that a great deal of that will come from job cuts.

The layoffs also reflect the evolution of the business itself. Some of the cuts were made to avoid duplication with existing Disney operations. But many came from areas that are far less vital than they once were to the work of producing, marketing and distributing content. International sales and distribution, marketing and administrative support jobs that were once central to the smooth functioning of the movie and TV supply chain are less important in a world of global streaming platforms.

Disney now plans to funnel a great deal of its content to its nascent Disney Plus and related streaming platforms. It doesn’t need as many boots on the ground in local markets — whether Kansas City or Kazakhstan — to strike the best deals with local buyers. Technological innovations and automation have also allowed for the streamlining of jobs that were formerly labor-intensive in terms of tracking money, ratings, advertising guarantees, marketing impressions, and technical specs for broadcast and satellite transmissions, as well as a host of other positions.

As ever, the Disney-Fox consolidation dismissals will fall hardest on those in the middle — in age and management hierarchy — who have specialty skills that may be seen as outmoded in the coming years.

“I don’t know where all of these people are going to go,” said an executive at a rival studio as the names of prominent laid-off Fox executives surfaced on March 21 and 22.

Although the Disney-Fox merger has been in the works for nearly 18 months, the finality of it hit hard last week. By March 20, there were physical reminders of the sweeping changes engulfing the Century City backlots and offices. The Murdochs are keeping the 20th Century Fox studio lot as part of Fox Corp. but are leasing a good chunk of the space to Disney for at least seven years, per the merger terms. For now, the vast majority of 21st Century Fox businesses now owned by Disney will still be housed on the Fox lot.

Once the merger was complete, the awkwardness of the plan for Disney and Fox Corp. to share the physical space of the Century City lot came into sharp relief. Former 21st Century Fox employees who are now on the Disney payroll will undoubtedly be rubbing elbows with former co-workers now on the Fox Corp. side. Sources said there could easily be touchiness about handling major deal negotiations and maintaining secrecy if it involves face-to-face meetings. “What happens when your competitors now see certain people walking into your building?” posited a Fox executive who made the transition to Disney.

The split-location arrangement will surely take a toll on the schedules of the top echelon of Disney executives, who will have offices at both Fox and Disney. Peter Rice, Walt Disney Television chairman, and Dana Walden, chairman of Disney Television Studios and ABC Entertainment, have direct reports and crucial operations both in Burbank and Century City. At least at the start, both are expected to devote a few days each week in both locations. More than a few industry observers noted that driving from Burbank to Century City can be fairly brutal in both directions during the work week.

Amid all the moving and shaking, Disney leaders sought to rally the troops and impress upon them the scope of the enlarged Disney operation. Disney chairman-CEO Bob Iger wrote a lengthy memo sent to Disney’s 210,000-plus employees the night the merger closed. Rice, in a memo to TV group staffers, addressed the need to meld disparate corporate cultures in order to achieve the promise of the Disney-Fox union.

“While we may have different experiences and backgrounds, we have deeply shared values and a single common mission: to be the greatest television company the world has ever known,” Rice wrote.

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