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This topic comprises 2 pages: 1 2
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Topic: A Disney Deal for Fox Is Coming Within Days
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Bobby Henderson
"Ask me about Trajan."
Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001
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posted 05-09-2018 01:06 PM
Yeah, the consolidation kills competition. Then that can lead to price hikes. Fewer players doesn't grow the market any. If anything it can lead to the market being reduced. The music industry is a perfect example of this. Up until the late 1980's there were lots of music recording labels of various sizes. A bunch were independent entities. The same held true for radio stations. Then merger-mania hit along with all sorts of other buy-outs or even rival freeze-outs. By the early 1990's far fewer companies held tighter control over music sales, distribution and radio airplay.
Prior to 1991 the music industry would see major shifts in the styles of music being consumed by the public every few years. The variety was great for music fans. Business people hated the unpredictable, sometimes volatile nature of it. So they tried to stop all these big cultural revolutions from happening in popular music by tightly controlling what got played on radio or stocked in stores. They succeeded for the most part with that effort. We haven't had any big ground-swell changes in music style in over 25 years. Changes have happened in a very slow transition. The media companies didn't count on customers music buying habits to drop-off a great deal due to stale content. And then the Internet, Napster and all that crap happened, which the media companies used as a scapegoat for all their problems. Their situation has only grown worse with the brick and mortar retail apocalypse wiping out most physical music stores. Online digital music sales have been mostly singles, not entire album purchases. And now the streaming companies are cannibalizing those individual unit sales, regardless if it's on physical media or a downloaded MP3/AAC file.
The movie and TV industry could find itself in the same position if we see an uncontrolled wave of mergers leading to an oligopoly of only a couple or so players. I think the traditional movie studios and old-style TV network people can't make heads or tails of the current situation. Maybe they're desperate. In 1980 a network needed at least a 20% share average of the Nielsen ratings to win the week. That can be done with under 10% now. The major broadcast TV networks really didn't have much competition from cable-based networks. Now it's routine for a show on a cable network like FX or AMC to win major Emmy awards or draw serious Nielsen ratings. And then Netflix, Amazon and Hulu are all mounting serious competition of their own.
I don't know what these big companies expect to get out of buying up other movie studios. I don't think they're going to succeed with gaining tight-fisted control over content.
quote: Martin Brooks
There's no reason for theaters to raise prices based on either of these companies buying Fox. The acquisition really has nothing to do with theaters.
Theaters have to pay rentals to the movie studios. If the newly merged entity decides it has more clout (and wants to offset some of the costs of that merger) it will raise its rental fees to movie theaters. Then those price hikes get passed on to the customer.
quote: Martin Brooks
Companies that have gone into too much debt have found themselves in big trouble (just look at the radio chains). Comcast would be going into big debt. I believe Disney was planning on an all-stock deal.
Giant radio station companies have gotten themselves into big trouble for a variety of reasons. They were ill-prepared for listeners abandoning their stale (same 10 songs in a row for months on end) play lists in favor of streaming alternatives (Spotify, Apple, Amazon, YouTube Vevo, etc). The radio stations assumed they had listeners over a barrel when technology and the Internet proved them to be very very wrong.
Comcast probably thinks it still has its customers over the barrel. They'll probably keep hiking their pay TV prices regardless of what happens, but if they succeed in buying Fox it is a guarantee they will pass a bunch of the expense of that purchase directly onto their customers via price hikes. And they'll probably want more from theater chains for movie DCP rentals.
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Mike Blakesley
Film God
Posts: 12767
From: Forsyth, Montana
Registered: Jun 99
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posted 05-09-2018 11:08 PM
I'm posting this article despite it having a quote by Richard Greenfield.
Disney Could Give Up Sky to Get Fox Assets
by Paul Bond
To fend off a possible bid from Comcast CEO Brian Roberts, Disney chief Bob Iger could let Comcast have Sky.
Bob Iger once called Sky a "crown jewel," but the realization is setting in that the Disney CEO may have to concede the European broadcaster so it can push through its deal to acquire much of 21st Century Fox before Comcast messes it all up, a source with knowledge of the situation tells The Hollywood Reporter.
Disney’s proposal includes Fox’s 39 percent interest in Sky, and by the time a Disney-Fox merger would be approved, Fox may own the entire thing, which is coveted by Iger, though not at the expense of the whole Fox deal.
Comcast is said to be readying a cash offer of about $60 billion for the same Fox assets Disney has agreed to acquire for $52.4 billion, and Comcast has also offered to buy all of Sky for $31 billion. In order to appease Comcast, and sweeten its offer for Fox, Disney may encourage Fox to let Comcast have Sky.
As the deal stands now, if Comcast were to get Sky, Disney would assume about $12 billion less in debt when it acquires Fox in the partial merger. That could represent more negotiating power should Disney still need to outbid Comcast for the Fox assets.
Letting Comcast get Sky so that Disney could close on Fox is an arrangement that makes sense, given Comcast’s mission is to grow more rapidly overseas and Sky could be a perfect fit, while Disney’s goal has more to do with total domination of the movie business and crushing Netflix.
Disney, courtesy of Star Wars, Marvel and Pixar, is already tops in film with a 22 percent share of the domestic box office last year, and adding Fox’s Avatar, X-Men and Planet of the Apes franchises could make it the most formidable studio in the history of Hollywood. As for Netflix, Disney is planning to launch a competing product next year and Iger said on Tuesday that Fox content would be part of it. He also said the plan is that nothing on Disney’s over-the-top service would be available to any other digital entity, so he will need a good amount of strong, exclusive content if he’s expecting to do battle with Netflix, the worldwide leader with 125 million subscribers.
Another Disney goal is to get Fox’s portion of Hulu which, added to what it already owns, would give Disney 60 percent. Interestingly, Iger said Tuesday that Hulu and the upcoming Disney service would co-exist just fine, suggesting Disney content that is inappropriate for the latter would be fed to the former.
As for Fox, it is controlled by Rupert Murdoch, and his plans include becoming one of the largest shareholders of Disney, the premier entertainment conglomerate run by Hollywood’s best CEO. Should the deal close, he would own about 5 percent of the $153 billion company. Murdoch is said to like the Disney deal that involves payment in stock more than a Comcast cash offer that could carry more tax liability. Murdoch's son Lachlan is likely to run what's left of Fox after a sale to Disney (or Comcast), while son James is likely to venture out on his own, perhaps creating a company that will invest in digital-media startups.
For Comcast CEO Brian Roberts, whatever happens is viewed as a victory, as he could acquire Sky, most of Fox or all of the above. If he doesn’t, he will have succeeded in driving up the price Disney must pay for any or all of those assets.
Everything remains in flux, but some on Wall Street see Sky as a near deal-breaker for Disney.
"Is there any scenario where Disney would proceed with Fox, but allow Comcast to assume majority control of Sky?" asks BTIG analyst Richard Greenfield. "We continue to believe Sky is critical to Disney's direct-to-consumer ambitions and international expansion."
On the other hand, Stephen Cahall of RBC Capital Markets calls Fox "quite important to Disney" while adding that Sky is "less so."
Hollywood Reporter article
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