Its Official
Walt Disney on Thursday announced it acquired many parts of
Twenty-First Century Fox in a deal worth more than $52 billion in stock. The company will get network Nat Geo, Asian pay-TV operator Star TV, Fox's movie studios, stakes in Sky and Hulu, and regional sports networks.
Disney's Fox acquisition bolsters its plans to become a dominant streaming service platform, making it a bigger threat to Netflix.
"The more desirable content they have, the better they will be able to compete in terms of trying to sell a subscription offering at a time there's so much competition for subscription-based services," said eMarketer senior analyst Paul Verna.
Bob Iger will remain Disney's chairman and CEO through the end of 2021, at the request of the board of directors of both companies.
In August, Disney announced it will
start standalone streaming servicesand pull its movies off of
Netflix starting in 2019. No price point has been set for its upcoming movie and TV plan, but the company said
it will be "substantially below" Netflix's price. Disney also will create a standalone ESPN digital service with
access to 10,000 additional live sporting events.
Disney has said its content service will have a smaller library than Netflix. Still, it has some fan-favorite titles including its animated features, Marvel movies, and Star Wars films. Adding Fox's repertoire of content — which includes the X-Men, Alien and Predator franchises in addition to shows like "The Simpsons," "Family Guy" and "The X-Files" — will only make it stronger.
"Both companies are so deep in terms of what they have," Verna said. "The decision to subscribe to a streaming service often comes down to does the content match what I, as a consumer, am interested in."
The deal puts Netflix in a more precarious situation, as some of this content it had previously licensed may now leave the service. Netflix will also have to
spend more to remain competitive. However, Netflix has already acknowledged it can't rely on other media companies' shows and movies and is focusing on its own content. The company has projected
it will spend $8 billion next year.
The Disney-Fox merger solidifies Netflix's in-house production strategy as a smart one, Verna said. And since Netflix's service is already established, Disney will face a stiffer battle than Netflix, Verna said: the market is already full of over-the-top video companies that offer premium content without requiring a cable or satellite subscription. It also is unclear how many of Fox's titles Disney will get streaming rights for, as well as
if it will pass federal antitrust laws.
"Would Netflix rather have all this Disney and Fox content?" Verna said. "Yes. Will they crumble as a result of not having it? I don't think so."