After weeks of market rumors, Walt Disney Co (NYSE: DIS) announced Thursday it is making a deal with Twenty-First Century Fox Inc (FOXA) to acquire the majority of Fox’s movie studio and cable TV assets.
The $52.4 billion deal will not come cheap for Disney, but it may be the best possible move the company could make heading into what will be a pivotal two-year stretch.
The mega-merger will be one of the largest in media history and would reportedly leave Fox shareholders with a 0.2745 Disney shares for each share they own. Disney would take over Fox’s 30 percent ownership in popular streaming service Hulu, which would give Disney majority control of the company.
Fox will separate the Fox Broadcasting Network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and the Big Ten Network into a new publicly traded company.
If approved by regulators, the merger would further concentrate power in Hollywood, as Disney, Comcast Corp. (CMCSA) and Time Warner (TWX) go head-to-head in the movie business.
Disney investors concerned about potential antitrust concerns will be watching the Justice Department’s case against AT&T (T) closely. AT&T announced a $108.7 billion buyout of Time Warner in 2016. Despite the fact that the proposed merger is a vertical merger between two companies which do not compete directly, the Justice Department sued to block the deal on antitrust grounds.
GBH Insights head of technology research Daniel Ives says Disney should have no problem closing the deal.
“While there are questions about potential regulatory approval with this impending deal, we believe (Disney chairman Robert) Iger and Disney have thought deeply about the potential roadblocks with this deal and are well prepared to navigate and ultimately consummate this groundbreaking acquisition,” Ives says.
Netflix (NFLX) remains the market leader in video streaming, but Ives says Disney is making a major splash by acquiring much of Fox’s content and its stake in Hulu. Ives says…
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