Disney has laid down the gauntlet and in the giant battle for control of global media assets, driven by the face off against the tech companies for control over media consumption by consumers.
The Walt Disney Company and 21st Century Fox, have announced that they have entered into a definitive agreement for Disney to acquire 21st Century Fox, including the Twentieth Century Fox Film and Television studios, along with cable and international TV businesses, for approximately $52.4 billion in stock. However the deal does not include some of Fox's broadcast and media assets which will be spun off into a new company. Immediately prior to the acquisition, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly listed company that will be spun off to its shareholders.
Key aspects of the deal announced on Thursday 14th December include -
- The deal values the 21st Century Fox assets at a total transaction value of $66.1 billion, or $28 a share. Disney will also assume approximately $13.7 billion of net debt of 21st Century Fox.
- Disney chairman-CEO Bob Iger has extended his contract with the company for another two years, through the end of 2021, in order to oversee the integration of the assets.
- 21st Century Fox shareholders will receive 0.2745 Disney shares for each Fox share held, giving Fox shareholders about 25% of Disney.
- The new Fox is expected to have annual revenue of approximately $10 billion and EBITDA of approximately $2.8 billion.
- Prior to the close of the transaction, it is anticipated that 21st Century Fox will seek to complete its planned acquisition of the 61% of Sky it doesn’t already own.
- Disney’s international reach would greatly expand through the addition of Sky, which serves nearly 23 million households in the UK, Ireland, Germany, Austria and Italy; Fox Networks International, with more than 350 channels in 170 countries; and Star India, which operates 69 channels reaching 720 million viewers a month across India and more than 100 other countries.
- The agreement also provides Disney with the opportunity to unite inter-related characters and stories that audiences are familiar with. Already, guests at Disney’s Animal Kingdom Park at Walt Disney World Resort can experience Pandora—The World of Avatar, a new land inspired by the Fox film franchise.
- The acquisition is expected to yield at least $2 billion in cost savings from efficiencies realized from combining Disney and Fox’s overlapping businesses within two years of the deal’s closing.
- The regulatory review of the acquisition is expected to last up to 18 months.
“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company.
21st Century Fox Executive Chairman Rupert Murdoch said: “The new Fox will draw upon the powerful live news and sports businesses of Fox, as well as the strength of our Broadcast Network. It is born out of an important lesson I’ve learned in my long career in media: namely, content and news relevant to viewers will always be valuable. We are excited by the possibilities of the new Fox, which is already a leader many times over.”
Mr. Murdoch continued: “As a result of the transformative transactions proposed today, we are paving the way for the new Fox, as well as a better Disney, to chart a course across a broad frontier of opportunity. We have always made a commitment to deliver more choices for customers; provide great storytelling, objective news, challenging opinion and compelling sports. Through today's announcements we are proud to recommit to that promise and enable our shareholders to benefit for years to come through ownership of two of the world's most iconic, relevant, and dynamic media companies. They will each continue to be leaders in creating the very best experiences for consumers.”