Main content

Mickey Mouse meets Murdoch - media digital disruption just got real

Stuart Lauchlan Profile picture for user slauchlan December 14, 2017
Summary:
Disney's streaming media ambitions took a major step forward with a $52.4 billion planned takeover of 21st Century Fox assets - assuming there are no anti-trust barriers in the way.

mickeymouse
When CEO Bob Iger announced Disney’s streaming strategy a few months back, he was bullish in the extreme, declaring:

We’re going to launch big, and we’re going to launch hot.

He was true to his word. Yesterday Iger launched what can only be read as the biggest roll of the dice by a traditional media empire against the digital upstarts that have parked their tanks on the front lawn of the Magic Kingdom.

Walt Disney Company’s $52.4 billion deal to buy most of 21st Century Fox, part of the Rupert Murdoch empire, ups the stakes enormously in terms of new media models. As Iger told journalists yesterday:

The pace of disruption has only hastened. This will allow us to greatly accelerate our direct-to-consumer strategy, which is our highest priority.

Disney had already served notice on the likes of Netflix and Amazon by announcing two new streaming services. ESPN Plus is due to arrive in the springk while a second offering, tapping into the Disney, Marvel, Lucasfilm and Pixar brand assets, will roll out late next year. Gaining Fox would help Disney to push out a third streaming service as well as providing it with a 60% stake in the Hulu streaming service.

In a memo to staff, Iger said:

Given 21st Century Fox’s collection of valuable content and its direct-to-consumer capabilities and experience in The Americas, Europe, and Asia, this acquisition will expand our direct-to-consumer offerings and significantly accelerate our strategy in that direction. It will also give us controlling interest in Hulu, which opens up even greater potential for us to grow and enhance that platform. As I’ve said before, creating a direct relationship with consumers is vital to the future of our media businesses. It’s one of our highest priorities as a company, and for me it’s one of the most interesting and exciting aspects of this deal.

Anti-trust

The sheer scale of the merger immediately attracted calls for anti-trust investigations, particularly as the AT&T planned tie-up with Time Warner has come under scrutiny. The Writers Guild of America West said:

In the relentless drive to eliminate competition, big business has an insatiable appetite for consolidation. Disney and Fox have spent decades profiting from the oligopolistic control that the six major media conglomerates have exercised over the entertainment industry, often at the expense of the creators who power their television and film operations. Now, this proposed merger of direct competitors will make matters even worse by substantially increasing the market power of a combined Disney-Fox corporation. The antitrust concerns raised by this deal are obvious and significant. The Writers Guild of America West strongly opposes this merger and will work to ensure our nation’s antitrust laws are enforced.

But one person seems happy enough. Sarah Huckabee Sanders, the White House press secretary, confirmed that President Trump had spoken with Rupert Murdoch and “congratulated him” on the deal. It was also reported by New York magazine that Trump called Murdoch ahead of the Disney deal to make sure that Fox News would not be among the assets sold.

My take

I’m deeply uneasy about this and trust it will be a deal that will be on the receiving end of the most rigorous regulatory scrutiny, not just in the US, but in Europe as well. Disney’s appetite is bordering on the rapacious. Where does a line get drawn? Flash forward ten years and how many more broadcasting giants will have been absorbed into the gestalt?Meanwhile Netflix has yet to make any public comment, but all eyes will be on what its next move in this disruptive media market battle royal is going to be.

Loading
A grey colored placeholder image