Disney, Fox Are in Talks to Complete Major Merger in Entertainment Industry

The logo for Walt Disney Pictures.

Image: Dean Bertoncelj / Shutterstock

Two of the biggest names in the entertainment industry are preparing to team up. According to the Financial Times, executives at Disney and 21st Century Fox have revived talks regarding a major merger in which Disney would purchase around $50 billion worth of Fox’s international and entertainment-related assets. This would include the company’s 39 percent stake in the pan-European broadcaster Sky.

The negotiations have been largely focused on Fox’s movie studio, its cable channels such as FX, and its international business holdings, including both Sky and Star of India. Analysis from MoffettNathanson has indicated that the total value of the assets sold would make up a significant percentage of the company’s $60 billion total value.

“Disney would gain more scale in TV and film production [and] cable networks, as well as adding its own distribution angle while accelerating its [direct to consumer video] strategy,” the MoffettNathanson analysts wrote in a research note.

For Fox, this potential blockbuster move comes at a tricky inflection point in the company’s history. Fox is separately working to complete a takeover of Sky rather than to merely own 39 percent of the company, but those efforts have run into regulatory trouble. Meanwhile, Fox may still be considering offers from other buyers, as cable TV giant Comcast has also expressed interest in controlling Fox’s entertainment assets.

If completed, this deal would have a major impact on the long-term direction of Disney’s business model. Today’s consumers are increasingly looking to consume TV programming in an “on-demand” fashion, and Disney has been looking for a way to compete with bigwigs like Netflix and Amazon in that realm. Disney is working to develop two new streaming services: one aimed at sports fans and another with more family-oriented programming. Acquiring Fox’s programming would give them a lot more content to beef up those new offerings.

Disney to Cease Self-Publishing Video Games

video games

 

Walt Disney is getting out of the video game industry. At least, they will no longer be self-publishing titles, although they’re going to continue licensing their properties to other developers. The announcement, which came on April 10th, came as a surprise to a lot of people, especially after they were talking about how strong that unit of the company was only four months ago. When you consider that Disney Infinity had quickly risen to the top spot in the “toys-to-life” model of video games. That model involves selling players a game, and then small figures that, when connected through a peripheral, allow them to use the characters represented in the game itself. Activision started the ball rolling with Skylanders back in 2011, and LEGO recently joined in with LEGO Dimensions.

But that business model is slowing down, and it has a lot of cost wrapped up in it. It seems like Disney is backing out just as the format is losing its steam, out of a fear that the initial hurdles will end up being too much after all. It’s certainly the safer path than waiting for the title to start failing and losing money.

It’s not the first time Disney has proclaimed their strength and then backed out of self-publishing video games. In 2011 they stopped making console games to focus on mobile games, despite their very successful release of Epic Mickey. But console gaming is a tough business, and big publishers like Activision or Electronic Arts have been at this for years, figuring out how to do things in many cases over multiple generations of consoles. It’s probably a safer bet for Disney to just let other publishers handle their properties while they focus on continuing to develop (or purchase) desirable properties in the first place.

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