Until recently, before Comcast dropped out of the bidding, most of the discussion over the sale of Fox’s entertainment assets centered around who could pay more? Disney won the bidding process and paid $20 billion more than their initial offer. However, the more important question is, who is best suited to steward Fox’s entertainment assets? Comcast, Disney, another tech streamer, a cable or telephone company or Fox?
Assuming the deal is approved by the company board’s and horizontal antitrust issues aside, here is what each prospective buyer might have and will (e.g., Disney) look like as an owner.
Money, as with Disney, is not an issue. Comcast owns NBCUniversal and a 30% stake in Hulu, like Disney and Fox. Comcast is the largest broadcasting and cable television company in the world by revenue. Disney is second only to AT&T-Time Warner, who recently merged to become the largest pay-TV company, the largest cable TV company, the largest home Internet service provider in the United States and the nation’s third-largest home telephone service provider. Clearly, the infrastructure is in place. Comcast also owns several studios including DreamWorks.
Comcast would have the ability to distribute content on any of its platforms and channels including Hulu, which it would own a 60% stake in if the sale were completed with Fox. Additionally, Comcast does not have the one, major issue concerning Disney; morality of content. Disney is a family-style content company, specifically when it comes to film and television. Fox is not. Hulu is also a well-known, utilized platform and customers would receive the added benefit of more content on an existing platform, albeit for a likely higher price. This as opposed to Disney’s platform that is in development. Is Disney willing to change its character from a family-friendly company to something broader? Is Comcast too big with Fox’s assets? Would the Justice Department challenge its potential purchase?
Arguably, Comcast would have been a better television and streaming partner (via its existing networks, platforms and Hulu), but it does not have the current film resources to challenge Disney, which Disney knew and pounced on securing the deal with Fox.
The real question here is, does Disney actually need Fox’s assets? While looking at the most recent film releases, ESPN+’s performance and a Netflix-style platform in the works, Disney is already dominating the entertainment, media and sports landscape and will likely continue to do so. The Walt Disney Company is also the third largest by revenue in the world behind Comcast and AT&T-Time Warner. Although the deal with Time Warner likely places AT&T number one in some categories now, along with having the cell phone market cornered, Disney owns ABC, ESPN, a 30% stake in Hulu and much more including studios Marvel, Pixar and Lucasfilm Ltd.
However, the United Kingdom’s Sky News property plays a role here because where Disney’s ABC has struggled to compete with Fox’s news service (as has everyone else), both Comcast and Disney have been approved in the UK to purchase Sky and both companies would be wise to add international influence and news where many American studios already have lots and offices.
Comcast and Disney are also in a race for the control of Hulu, a potential challenger to Netflix with the right leadership and content. Additionally, they already have sports on the platform having broadcast the NHL playoffs and other major events.
Disney should and must find a way for the Disney and Fox properties to play well together, or separately, like car companies do with brands, makes and models. From a business dominance standpoint, Disney just could not pass on the opportunity to purchase a major studio’s (e.g., Fox) entertainment assets, while letting a competitor do to them what it just did to Comcast/NBCUniversal.
With its purchase, Disney will now be in a great position to challenge Netflix with its newly added content and 60% ownership in Hulu, plus its own existing and developing platforms.
Although there were rumors, no tech/streaming/entertainment giant publicly entered the Fox picture as a potential buyer. Amazon could have benefited from Fox’s content on Amazon Prime. Apple could also have immediately added content to its up-and-coming studio. Also, let us not forget about Netflix, because whoever own Fox’s assets will likely remove their content from Netflix’s platform (like Disney is already doing) and onto their own like Hulu, etc. Then again, the streamers might also be well-suited to avoid horizontal or vertical antitrust issues, not to mention their focus on developing original content, without the legal, clearance, and rights encumbrances. For major news companies, adding Sky News would add to their international exposure, but where a net gain might be a net loss for a competitor, a traditional news company adding significant entertainment properties (and debt), would not be wise.
Rupert Murdoch wanting to sell is the end of a storied career in entertainment, media and sports. Murdoch will still own Fox News, plus FS1 and other sports stations, but Disney must sell-off the regional sports networks as part of the deal. 21st Century as a studio is world renowned and when looking at the success of recent films, is the only studio (in both film and television) competing with Disney in terms of blockbusters and money-makers. It would have been great for business and content to see the company continue to compete with the other greats and at the least split the company between Murdoch’s sons as its new leaders. Moreover, Fox could lose some of its culture in a sale with Disney.
Maybe Fox should have sold its television programs and rights to Comcast and movie properties to Disney. Maybe the split negotiation would have driven up the price and profit for Fox. Maybe Comcast and Disney refused to deal unless it was for all entertainment assets.
When it comes to controlling content in today’s environment, everyone wants to own it, distribute it and watch it. How the market shakes out is important, but ultimately, the questions should go beyond just who has the most money to make a purchase. The real question is, who will be the best steward of Fox assets? It may indeed have been Fox itself, but Disney was also best situated to challenge the entertainment newcomers. Fox sold high while turning its focus to news and sports.