The Stakes of the Disney-Fox Merger
In a landmark deal, the recently completed $52.4 billion dollar merger of Fox by Disney marked a further consolidation of the large content networks. According to Variety, this historic deal is the second largest ever, after the AOL-Time Warner merger in 2001 for nearly double the amount at $103.5 billion. What does this mean for consumers and the entertainment industry going forward?
The merger may have reached the water cooler, since the deal grants Disney the film rights to more Marvel comics properties like the Fantastic Four and X-Men among others. While fans of the Marvel Cinematic Universe may celebrate this move, there are other facets to the deal that are worth exploring and will continue to be relevant in the years going forward.
With the advent of industry disrupting streaming services like Netflix and Amazon Prime, it’s become more difficult for traditional cable networks to grow. An ever-present issue for the large media conglomerates is the increase in large tech-savvy competitors like Apple breaking into the market. In a sense, it’s a type of “too big to fail” $52.4 billion dollar deal. Sources close to Rupert Murdoch, the current acting CEO of Fox News, claimed he understood that these other giants in the technology business would further evolve how people consumed content. Facebook, for example, has made plays for sports rights. Earlier in the year, the company bid $600+ million in an unsuccessful move (it was outbid by 21st Century Fox’s Star India with $2.5 billion) to stream Indian cricket matches. Consolidating two large media conglomerates would make it possible to be “large enough” to continue expanding and staunching the rate at which newer, rising competitors take market share.
The consolidation also begs the question – what will happen to the film market if a large conglomerate has a greater share of what films can and can not be released? Fox Searchlight studios has found critical success in its smaller scale ventures, greatly contrasting that of the Disney-Marvel and Star Wars blockbuster machine, churning out hit after hit with big budgets and elements of mass-appeal to enter the box office stratosphere. “Shape of Water” producer J. Miles Dale pled Disney CEO Bob Iger “not to mess” with the offshoot of Fox’s cinema division at the Critics Choice Awards, further stating that the studio has had a great thing going with it’s unconventional film choices and releases.
Disney has plans to cut ties with large streaming names like Netflix and Amazon, and making way to pave its own path into the streaming sector by launching a completely separate entertainment platform. Incumbent CEO Bob Iger will focus on the entertainment side while Murdoch will be able to draw his attention to growing news and live program viewership.
Despite concerns that the merger will ultimately stifle creative independent works of art, there is still the fact that the content producers themselves–the ones who write the stories or help realize artistic visions–are autonomous. This could be a more prevalent form of competition in the coming years as people like Ryan Murphy, who was showrunner for “American Horror Story,” “Glee,” “Feud,” and “American Crime Story” has a contract with Fox that expires mid-2018. The fact that he has considered moving to Amazon or Netflix according to Bloomberg suggests that high quality content will be in much greater demand and thus, the people who create it will be even more sought after by these large media conglomerates. Ultimately, while there is much to be seen as to the impact of the merger, one can hope that there continues to be greater high quality content diverse in topics and scale despite the consolidation of these companies.