Acquisition of 21st Century Fox by Disney
The acquisition of 21st Century Fox by the Walt Disney Company was announced on December 14, 2017, and was completed on March 20, 2019. Among other key assets, the acquisition included the 20th Century Fox film and television studios, U.S. cable channels such as FX, Fox Networks Group, a 73% stake in National Geographic Partners, Indian television broadcaster Star India, and a 30% stake in Hulu. Most remaining assets, which were excluded from the deal, were spun off into a new company called Fox Corporation on March 19, 2019. Other 21st Century Fox assets such as the Fox Sports Networks and Sky were divested and sold off to Sinclair and Comcast, respectively.
Background
was formed on June 28, 2013 by splitting of entertainment and media properties from News Corporation and founded by Rupert Murdoch. It formally began trading on NASDAQ and the Australian Securities Exchange on July 1, 2013, with its executives including Rupert Murdoch being chairman and chief executive officer of the company, while Chase Carey took the posts of president and chief operating officer, with co-chairman and co-CEO positions were created in 2014 and later filled by Lachlan Murdoch and James Murdoch, respectively, both sons of Rupert Murdoch.History
Early developments (November 2017–April 2018)
On November 6, 2017, CNBC reported The Walt Disney Company was negotiating a deal with Rupert Murdoch to acquire 21st Century Fox's filmed entertainment, cable entertainment, and direct broadcast satellite divisions, including 20th Century Fox, FX Networks, and National Geographic Partners. The deal would reportedly exclude the Fox Broadcasting Company, 20th Century Fox's studio lot, Fox Television Stations, Fox News Group, and Fox Sports, which would be spun off into a new independent company run by the Murdoch family.According to Disney CEO Bob Iger, the idea of purchasing 21st Century Fox's assets came after Disney acquired majority control of the streaming company BAMTech with anticipation to develop its own streaming service, which would eventually launch in November 2019 as Disney+. It was less interested in 21st Century Fox's production capacities and more keen to acquire 21st Century Fox's own film and television libraries to help expand the streaming service's library. Additionally, as 20th Century Fox was the last major studio from the studio era to be acquired when Rupert Murdoch took full control in 1985, its film library was largely intact relative to its peers from that era such as Metro-Goldwyn-Mayer.
The two companies had done business in 2001, when Disney acquired Fox Family Worldwide from the original incarnation of News Corporation, which included the Fox Family Channel, Saban Entertainment, and the international Fox Kids cable networks controlled by Fox Family Worldwide, among other assets.
The deal would also include 20th Century Fox's film rights to certain third-party franchises, such as X-Men, Deadpool, and Fantastic Four, the distribution rights to the original and prequel trilogies of Star Wars, as well as consolidate ownership of other franchises both share such as Home Alone, and give Disney access to adult animation with the ownership of The Simpsons and Family Guy.
Talks had stalled for the day without a deal being finalized, but it was reported on November 10 that the prospected deal had yet to be fully abandoned. On November 16, it was reported that Comcast, Verizon Communications, and Sony had also joined Disney in a bidding war for 21st Century Fox. During a recent shareholders meeting, 21st Century Fox Co-chairman Lachlan Murdoch said 21st Century Fox was not in the category of "sub-scale" companies that were "finding it difficult to leverage their positions in new and emerging video platforms", but was instead a company that had "the required scale to continue to both execute on our aggressive growth strategy and deliver significant increased returns to shareholders".
Because Disney owns the American Broadcasting Company, Comcast owns the National Broadcasting Company, and 21st Century Fox owned the Fox Broadcasting Company, a full acquisition of 21st Century Fox by Disney or Comcast would have been illegal under the Federal Communications Commission 's rules prohibiting a merger between any of two of the four major broadcast networks.
On November 28, while mentioning a rumor that the rumored negotiations between Disney and 21st Century Fox were progressing at a rapid pace, Mike Fleming Jr. of Deadline Hollywood commented, "given how Disney made the Marvel and Lucasfilm deals under the cone of silence, if this happens we'll probably only know it when it's announced. It is certainly being talked about today."
Rumors of a nearing deal continued on December 5, with additional reports suggesting the FSN regional sports networks would be included in the sale.
On December 11, Comcast announced it was dropping its bid on the Fox assets. On December 14, Disney confirmed an all-stock transaction worth around $52.4 billion to have Fox sell their entertainment assets to Disney, pending approval from the United States Department of Justice Antitrust Division.
In February, CNBC reported that, despite the Disney–Fox deal, Comcast might take action to outbid Disney's $52.4 billion offer, if AT&T's acquisition of Time Warner went through. Despite this, Fox President Peter Rice stated he was content with Disney's offer and that the Fox assets were "a great fit for Disney."
Early in March, the non-profit group Protect Democracy Project Inc. filed a lawsuit against the United States Department of Justice on the hopes to seek any records of communications between the two groups over Disney's pending acquisition of Fox. The lawsuit also sought "any related antitrust enforcement efforts by the DOJ, to find out whether the president or his administration is improperly interfering with the independence of the DOJ out of favoritism for a political ally." Donald Trump congratulated Murdoch for the Disney–Fox deal while attacking AT&T's acquisition of Time Warner, particularly over the ownership of CNN, which he frequently criticized due to alleged bias.
On April 12, 2018, Rice revealed the acquisition was expected to close by summer 2019. Beginning in March 2018, a strategic reorganization of the Disney conglomerate saw the creation of two business segments, Disney Parks, Experiences and Products and Walt Disney Direct-to-Consumer & International. Parks & Consumer Products was primarily a merger of Parks & Resorts and Consumer Products & Interactive Media, while Direct-to-Consumer & International took over for Disney International and global sales, distribution, and streaming units from Disney–ABC Television Group, Studio Entertainment, and Disney Digital Network. Given that Iger described it as "strategically positioning our businesses for the future", The New York Times considered the reorganization done in expectation of the 21st Century Fox purchase.
Bidding war between Disney and Comcast (May–July 2018)
On May 7, 2018, it was reported that Comcast spoke to investment banks about topping Disney's offer to acquire Fox. Shortly afterwards, Iger stated he was willing to drop Sky plc from the deal to ensure the Fox acquisition.Several Fox investors said they would be open to terminate the company's agreement with Disney if Comcast followed through on its plan to launch a rival all-cash bid for $60 billion. Murdoch's family trust controlled 39% of Fox due to shares it held with special voting rights. However, under the company's by-law, those special rights did not apply to a vote on the Disney/Fox deal when the Murdoch trust only controlled 17% of the vote, making it easier for other shareholders to defeat him, which was expected as early as next month. Later that month, it was confirmed that Lachlan Murdoch, rather than James Murdoch, would take charge of the new company tentatively known as "New Fox".
The following week, Comcast publicly announced it was looking into making an all-cash counter-offer for the Fox assets that Disney proposed to acquire. Shortly after, it was reported that Disney was looking into making its own all-cash counter-offer for Fox assets if Comcast went through with their offer.
The next day, Disney and Fox announced they had set their shareholder vote meetings for July 10, although both said Fox's meeting could be postponed if Comcast came through with their offer.
On June 12, AT&T was given approval by District Judge Richard J. Leon to acquire Time Warner, easing concerns Comcast had regarding whether government regulators would block their bid for Fox. Consequently, the next day, Comcast mounted an all-cash bid of $65 billion for the 21st Century Fox assets that were set to be acquired by Disney.
On June 18, it was reported that Disney would upgrade its already-existing $52 billion claim to contest Comcast's proposed counter-offer for the Fox assets.
On June 20, Disney and Fox announced they had amended their previous merger agreement, upping Disney's offer to $71.3 billion, while also offering shareholders the option of receiving either cash or stock. On June 21, Murdoch said in response to Disney's higher offer: "We are extremely proud of the businesses we have built at 21st Century Fox, and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry." That still would not have prevented other companies from making a bid, as the deal still needed to be voted on by shareholders.
Iger explained the reasoning behind the bid: "Direct-to-consumer distribution has actually become an even more compelling proposition in the six months since we announced the deal. There has just been not only a tremendous amount of development in that space, but clearly the consumer is voting—loudly."
On June 27, the United States Department of Justice gave antitrust approval to Disney under the condition the company sold Fox's 22 regional sports channels within 90 days of closing, to which the company agreed. The next day, Disney and Fox boards scheduled July 27, 2018 as the day shareholders voted on the sale of Fox's properties to Disney.
On July 9, a Fox shareholder filed a lawsuit to stop the acquisition from Disney, citing the absence of financial projections for Hulu. On the same day, CNBC reported Comcast was looking for companies that could take over Fox's Regional Sports Networks. The shareholder claimed that would've made Comcast's antitrust problems regarding the takeover of Fox assets easier as Comcast was preparing to make a new all cash counter-offer before July 27, 2018.
On July 12, the Department of Justice filed a notice of appeal with the D.C. Circuit to reverse the District Court's approval for AT&T's acquisition of Time Warner. Analysts said the chances of a victory by the DOJ were small, but would be the "final nail in the coffin for Comcast's Fox chase. This is a clear gift to Disney." On the next day, AT&T CEO Randall L. Stephenson gave an interview with CNBC, about Comcast's bid for Fox: "It probably can't help it. You're in a situation where two entities are bidding for an asset, and this kind of action can obviously influence the outcome of those actions."
On July 13, Disney received the support of the Institutional Shareholder Services and Glass Lewis, the two most prominent proxy adviser firms in the world. Fox shareholders were recommended by the advisers as means to provide for Disney's future.
On July 16, CNBC reported Comcast was unlikely to continue its bidding war with Disney to acquire Fox. Instead, Comcast would likely continue pursuing the 61% stake of Sky.
On July 19, Comcast officially announced it was dropping its bid on the Fox assets in order to focus on its bid for Sky. CEO Brian L. Roberts said "I'd like to congratulate Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company."