LOS ANGELES, November 7, 2017 – Talks between 21st Century Fox (symbol: FOX/A) and Disney (DIS) are being held, with Disney likely to make an offer to purchase most of most of Fox’s media assets. It remains unclear if these talks will lead to an actual deal.
Reportedly, Disney would purchase Fox’s current entertainment channels such as FX and National Geographic as well as its movie studio and distribution activities. Fox is rumored to be turning its focus to its cable and network news and sports properties. But the alleged deal seems to have hit a snag, according to this Wall Street Journal report:
“The Fox and the Mouse
For years Rupert Murdoch’s entertainment empire has looked like it would be an acquirer, not a target, in any major M&A transaction. Now, that’s changed. As CNBC first reported, Disney held talks with 21st Century Fox to acquire some of its core assets, including cable TV properties and its studio and international distribution operations. Fox wasn’t happy with the terms proposed, and the talks stalled, but it is open to a deal in principle, The Wall Street Journal reports. What’s changed? The elder Mr. Murdoch has much of his attention focused these days on Fox News, which would remain within 21st Century Fox under the deal terms that were discussed. And the thinking is that Wall Street isn’t properly valuing Fox’s entertainment assets. All of this raises some significant questions, among them: Could other suitors emerge now that Fox is, surprisingly, kind of in play? And what does this mean for Mr. Murdoch’s sons, James and Lachlan, who were groomed to inherit his empire?”
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In the event the rumored deal does go through, Disney would have a considerably greater reach than it already has, adding an additional film studio to its portfolio as well as the giant library of Fox films and shows.
Whether the Fox deal happens or not, Disney appears to be continuing on its recent aggressive path, as first exemplified by its August announcement that the company would stop selling movies to Netflix (NFLX) as soon as its current contract was up. Disney also plans to launch its own streaming site in 2018, offering premium content, such as films and ESPN programming, directly to consumers.
For its part, Fox has seen ratings decline for its National Geographic and FX cable TV channels.
Perhaps for that reason, 21st Century Fox CEO Rupert Murdoch, along with his two sons James and Lachlan, apparently has decided to narrow his corporate focus to Fox’s most profitable and prized businesses, given the continuing major disruptions in the current media landscape, as the WSJ implies. However, with both the Murdochs and Disney apparently at an impasse, 21st Century Fox may have put itself in play anyway.
On Wall Street, the common stock of 21st Century Fox rose 10 percent when word of the talks with Disney surfaced. Shares of Netflix fell.