Disney Eyes 21st Century Fox Deal To Create Hollywood Mega Studio

Disney Eyes 21st Century Fox Deal To Create Hollywood Mega Studio

The Hollywood consequences of this deal cannot be understated. In its acquisition of the 21st Century Fox studio properties, Disney would become a mega-studio.
Brad Jackson

CNBC reported Monday that Disney and 21st Century Fox, two of Hollywood’s most powerful studios, have held talks about a purchase agreement. Executives at Fox, including CEO James Murdoch, believe the company might be more profitable if it focuses on its TV assets: Fox News, Fox Business, Fox Sports, and the Fox broadcast network. Shedding their other TV assets and their movie studio would allow the streamlined company to “compete more effectively.”

The Hollywood consequences of this deal cannot be understated. In its acquisition of the 21st Century Fox studio properties, Disney would become a mega-studio. Fox is home to the Avatar movies, Planet of the Apes, Die Hard, Aliens, Deadpool, and perhaps most importantly, the X-Men. With Disney’s takeover of Marvel, it secured the rights to Iron Man, Captain America, Thor, The Avengers, and more, but not the X-Men or Fantastic Four, which were under a separate deal with Fox. Those are classic Marvel brands that Disney would love to have at their disposal.

The Potential For Series and Sequels Would Be Endless

Disney was able to bring Spider-Man into the Marvel Cinematic Universe recently by making a deal with Sony for the recent “Spider-Man: Homecoming,” which featured Disney staple Iron Man as well. If they could bring Wolverine, Professor X, Magneto, and the rest of the X-Men into the fold as well as the resurgent and edgy Deadpool, and the in-much-need-of-a-reboot Fantastic Four, the potential storylines, I mean sequels, would be endless.

This is also good news for Star Wars fans. Although Disney’s purchase of Lucasfilm several years ago gave them ownership of the Star Wars franchise, and all its future productions, it did not get them the distribution rights of the original 1977 Star Wars film. That has been under the control of 21st Century Fox in perpetuity since Lucas negotiated the contract for the film. This deal would bring that movie back to Lucasfilm and potentially enable Disney to release the original cut of “Star Wars: A New Hope,” which hasn’t been seen in a theater in nearly 40 years.

The only version of Star Wars you can buy now is a modified version of the “Special Edition” released in 1997. Star Wars fans have been begging for the original “Han shot first” version of the movie for years. A 4K reissue would undoubtedly make a lot of money for Disney and, without George Lucas to object, it is more likely to happen with the Mouse House fully in control of the film.

Not Such a Good Deal for Movie Theaters

This deal may not be good news for movie theaters, though. Disney has made news recently for heavy-handed demands on theaters in order to show the upcoming “Star Wars: The Last Jedi.” Disney is dictating which screens it must be shown on, how long it must run, and will take a bigger cut of the profits from the ticket sales than usual. With a studio the combined size of Disney and Fox, they would have unrivaled power in dictating how theaters played their movies.

The other losers in this deal could be Netflix, Amazon, and Hulu. Disney announced earlier this year it would pull its movies from Netflix and move them to their own direct-to-consumer streaming service. The app will contain all their Disney kids’ shows, classic animated features, Pixar films, the teen-focused Disney XD properties, and all the movies from Marvel and Lucasfilm.

Adding Fox’s long back catalog of movies plus their future hits would take a huge chunk of movies off the table for the main streaming services. Consolidating that power would make it easier for consumers to watch so many hits in one location, but would surely command a higher per month subscription fee, and limit the archival content available to Netflix and its competitors.

The 21st Century Fox film studio assets are valued around $8.2 billion, according to Stephen Cahall of RBC Capital Markets. If you include the rest of the TV networks available in the deal, including National Geographic, the FX networks, and the stakes Fox owns in international channels, Cahall believes the value may be closer to $20 billion. That may seem like a lot, but with Disney’s market cap north of $130 billion this is a deal that would be easy for them to make.

There is one significant problem for Disney to consider: its leadership. Bob Iger, the current CEO, has promised he will not return when his contract ends in mid-2019. With a deal this complicated, it will take a least a year to navigate all the legal, regulatory, and financial hurdles and finally close. If it were to happen sometime in the next few months, that would mean the ink wouldn’t be dry until just before Iger’s departure. His successor at Disney, who is still undetermined, will be charged with integrating these two giants, a difficult task for anyone, much less someone new to the role of Disney CEO.

Should Disney pull this off purchase of Fox, the studio that started with a black and white Mickey Mouse in “Steam Boat Willie” nearly 90 years ago will be home to many of the world’s biggest entertainment franchises and alter the landscape of Hollywood’s future at Wall Street, the box office, and online forever.

Brad Jackson is a writer and radio personality whose work has appeared at ABC, CBS, Fox News, and multiple radio programs. He was the longtime host and producer of Coffee & Markets, an award-winning podcast and radio show with more than 1,500 episodes. Brad covers all things edible and cultural for The Federalist. You can find him on Twitter and Instagram at @bradwjackson.

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