Disney/FOX Acquisition Thread

[AlexanderMBush]

Pretty sure once the pre-production deals are done, Universal is gonna have to look somewhere else for HHN and license more properties.

To be fair though, once the ink is settled; it's going to get as confusing on how Marvel is being done.

But that I would assume, due to it being an already completed contract; that Disney couldn't change anything if they even wanted too. And not to mention, it's sounded like that both FX and Universal have had good relationship so-far, with Hollywood having close collabortation with FoxNext.

 

[uiwansonic88]

I think some of you guys may be overstating the value of a company having the ability to put old movies and tv shows made before around the 1960s on streaming sites and tv channels. How often do you all think people under the age of like 40 watch movies and tv shows made before the 1960s?

I think a lot of the shows and movies in general that were made before that time will be of little financial value to a big company like Universal or Disney in the coming decades. I don't think a lot of stuff from the 1960 to 1980 is watched much by people under the age of 40. I might be wrong about this stuff, but I have a suspicious that a lot of that stuff is of less financial value compared to a lot of tv shows and movies made at a more recent date.

Some reasons for this are that a lot of people didn't see these tv shows and movies when they were originally in theaters or on tv, changes in people's opinions about cinematography of tv shows and movies, people's opinions about some things that have to do with race and gender in some of those shows and movies. However, I think many animated tv shows and movies made before 1960 that were marketed at children when they came out have a better appeal to many people under the age of 40 currently than many live action tv shows and movies made during that same period. I think some of those animated tv shows and movies have some nostalgic appeal to some of these people under 40 and also for people around 41 to 59 years old currently because some of them may have seen them when they were children and people tend to have some nostalgia for things they associate with their childhood.

Also, many of these movies and tv shows from before 1960 will enter the public domain sooner than more recent tv shows and movies.

Old retired people, especially ones in retirement centers might watch a lot of tv due to not working and maybe at some retirement homes not being allowed to use computers with internet access, but many of them will die sooner than younger people.

 

[zg44]

All the Fox-Universal deals will continue until expiration, the same goes for Simpsons contract. And most of these deals are 20-25 years long.

I'd expect Universal to halt any revisions/upgrades to the expiring deals though past the 2020s if possible.

I think some of you guys may be overstating the value of a company having the ability to put old movies and tv shows made before around the 1960s on streaming sites and tv channels. How often do you all think people under the age of like 40 watch movies and tv shows made before the 1960s?

I think a lot of the shows and movies in general that were made before that time will be of little financial value to a big company like Universal or Disney in the coming decades. I don't think a lot of stuff from the 1960 to 1980 is watched much by people under the age of 40. I might be wrong about this stuff, but I have a suspicious that a lot of that stuff is of less financial value compared to a lot of tv shows and movies made at a more recent date.

Some reasons for this are that a lot of people didn't see these tv shows and movies when they were originally in theaters or on tv, changes in people's opinions about cinematography of tv shows and movies, people's opinions about some things that have to do with race and gender in some of those shows and movies. However, I think many animated tv shows and movies made before 1960 that were marketed at children when they came out have a better appeal to many people under the age of 40 currently than many live action tv shows and movies made during that same period. I think some of those animated tv shows and movies have some nostalgic appeal to some of these people under 40 and also for people around 41 to 59 years old currently because some of them may have seen them when they were children and people tend to have some nostalgia for things they associate with their childhood.

Also, many of these movies and tv shows from before 1960 will enter the public domain sooner than more recent tv shows and movies.

Old retired people, especially ones in retirement centers might watch a lot of tv due to not working and maybe at some retirement homes not being allowed to use computers with internet access, but many of them will die sooner than younger people.

Sure, even for a company with a deep library like a Big 6 studio, the value of the library is at most a couple billion.

If we break down this proposed Fox/Disney transaction, at most the value of Fox's library is somewhere around $5-7 billion in that Fox tv/movie studio part of the assets.

In the grand scheme of things, that isn't where the value is. For streaming of tv shows/movies, the value is in production of new content.

 

[Paulio]

All the Fox-Universal deals will continue until expiration, the same goes for Simpsons contract. And most of these deals are 20-25 years long.

I'd expect Universal to halt any revisions/upgrades to the expiring deals though past the 2020s if possible.

I fear that the Simpsons land will continue as long as Universal wants just to spite Disney because ending it would inevitably give Disney the position to use the Simpsons for its parks and advertising or what not.

 

[AlexanderMBush]

All the Fox-Universal deals will continue until expiration, the same goes for Simpsons contract. And most of these deals are 20-25 years long.

I'd expect Universal to halt any revisions/upgrades to the expiring deals though past the 2020s if possible.

I would be curious to see what happens if renegotiation's or extensions happen later on, but I would imagine that none of the contracts currently in-place would become void.

 

[zg44]

I fear that the Simpsons land will continue as long as Universal wants just to spite Disney because ending it would inevitably give Disney the position to use the Simpsons for its parks and advertising or what not.

I would be curious to see what happens if renegotiation's or extensions happen later on, but I would imagine that none of the contracts currently in-place would become void.

Given it was signed at around the same time as the Harry Potter contract, I'd guess the Simpsons contract expires sometime in the late 2020s.

It probably expires around 2027-2030 given that Harry Potter's expiration is set on July 30, 2029.

But yeah, I don't expect any extensions that aren't already in the contracts. Disney has no incentive to grant additional extensions on any of the rights.

 

[ThemeParks4Life]

Disney Deal for Fox Would End Era of the ‘Big Six’ Studios - WSJ

people with knowledge of the deal talks said Fox’s movie studio may be scaled back significantly and folded into Disney’s own film operation.

 

[Paulio]

Given it was signed at around the same time as the Harry Potter contract, I'd guess the Simpsons contract expires sometime in the late 2020s.

It probably expires around 2027-2030 given that Harry Potter's expiration is set on July 30, 2029.

But yeah, I don't expect any extensions that aren't already in the contracts. Disney has no incentive to grant additional extensions on any of the rights.

And that's my major concern. The Simpsons area would likely to last forever instead of sooner or later because getting rid of it means Disney would get a chance to use them to increase profit to take advantage of them, just like Universal would never remove the Marvel rights in Orlando anytime soon because Disney would take advantage. So I say it would be pretty embarrassing for Universal twice in a row to pay for a property owned by the House of Mouse.

With that said, the Disney/Fox deal is far from done, even if it's officially announced, because it still needs to be subject to approval by the DOJ anti-trust division and regulators. Horizontal mergers, like the Disney/Fox deal, have historically have been subject to scrutiny and more investigation than the vertical one like the AT&T-Time Warner merger. What differs from Disney's past acquisition is the entire movie and TV studio of 20th Century Fox would be owned, as opposed to production and comics companies like Pixar and Marvel. It would leave an uncertain future for both the regulators and the entire movie industry as a whole. We all know what Disney does within the Hollywood industry and its recent actions have caused a concern such as the LA Times and pressuring theaters for the Last Jedi without concerns for other studios' movies. If the Disney/Fox deal is fully approved, Disney would own 1/3 of the box office market share, and Disney would use Fox to increase its leveraging power and negotiating power to boot off films from Disney's competitors small or big in favor of their own movies. That is NOT good and it's bad for the Hollywood business. It's too much and it would still raise anti-trust concerns.

Disney Deal for Fox Would End Era of the ‘Big Six’ Studios - WSJ

Nothing speaks remotely true than this. As I stated above, we all know what Disney does behind the curtains.

 

[zg44]

Disney Deal for Fox Would End Era of the ‘Big Six’ Studios - WSJ

I posted it above, but in summary, this is how Disney views the assets its getting:
Fox Assets that Disney views as core assets (these are the ones Disney cares most about):
1) Fox's Regional Sports Networks (the most valuable asset, huge for ESPN's upcoming streaming service to include all those regional events)
2) 30% of Hulu to join its 30%, giving Disney 60% control (control over 3rd largest streaming service in US)
3) Star India and 39% of Sky which requires a bid for full control immediately under UK laws, so it will become 100% control of Sky by mid-2019 (very valuable Europe/India assets)
4) Fox's television production studio (including all the rights that it controls, like Fox TV Animation) - very valuable tv studio for Disney's future streaming service
5) FX/National Geographic networks - good content for Disney's future streaming service
6) The X-Men/FF rights and Avatar sequels as well as the distribution rights to Star Wars original releases

Fox Assets that Disney views as shrinkage/spinoff assets:
1) Fox tv/film distribution: expect massive/total job losses there, completely redundant with Disney's tv/film distribution
2) Blue Sky Studio (I full expect this to be sold or spunoff; has performed very poorly and main franchise Ice Age had a huge decline in box office)
3) Fox Searchlight and Fox 2000 (the genre/prestige film divisions) - Disney may keep them around, but Disney exited these businesses years ago when it had its own prestige division, so I expect them muddle along at most
4) 20th Century Fox (the main studio) - most of Fox's film franchises are not performing well: Aliens and Apes had poor performing editions recently, Independence Day sequel was unprofitable


So yeah, I fully agree that the film assets are the most unwanted part of this merger. At most, we see Fox Searchlight and Fox 2000 muddle along, but the rest of it? I think most of the film studio will be dismantled with the X-Men/FF rights going to Marvel Studios and Avatar sequels moving to Disney's studio.

 

[PADIT1]

It's kind of embarrassing for Universal to pay for two properties owned by Disney isn't it?

 

[Paulio]

I posted it above, but in summary, this is how Disney views the assets its getting:
Fox Assets that Disney views as core assets (these are the ones Disney cares most about):
1) Fox's Regional Sports Networks (the most valuable asset, huge for ESPN's upcoming streaming service to include all those regional events)
2) 30% of Hulu to join its 30%, giving Disney 60% control (control over 3rd largest streaming service in US)
3) Star India and 39% of Sky which requires a bid for full control immediately under UK laws, so it will become 100% control of Sky by mid-2019 (very valuable Europe/India assets)
4) Fox's television production studio (including all the rights that it controls, like Fox TV Animation) - very valuable tv studio for Disney's future streaming service
5) FX/National Geographic networks - good content for Disney's future streaming service
6) The X-Men/FF rights and Avatar sequels as well as the distribution rights to Star Wars original releases

Fox Assets that Disney views as shrinkage/spinoff assets:
1) Fox tv/film distribution: expect massive/total job losses there, completely redundant with Disney's tv/film distribution
2) Blue Sky Studio (I full expect this to be sold or spunoff; has performed very poorly and main franchise Ice Age had a huge decline in box office)
3) Fox Searchlight and Fox 2000 (the genre/prestige film divisions) - Disney may keep them around, but Disney exited these businesses years ago when it had its own prestige division, so I expect them muddle along at most
4) 20th Century Fox (the main studio) - most of Fox's film franchises are not performing well: Aliens and Apes had poor performing editions recently, Independence Day sequel was unprofitable


So yeah, I fully agree that the film assets are the most unwanted part of this merger. At most, we see Fox Searchlight and Fox 2000 muddle along, but the rest of it? I think most of the film studio will be dismantled with the X-Men/FF rights going to Marvel Studios and Avatar sequels moving to Disney's studio.

And that's the major reason why I don't think the deal is good, for both entertainment industry personnel and the consumers. As I stated before, Disney's acquisition of Fox is entirely different than Pixar, Marvel, and Lucasfilm. It's the whole ungodly asset of treasure Fox has to offer, not like Pixar, Marvel, and Lucasfilm with one-sided valuable assets.

 

[zg44]

It's kind of embarrassing for Universal to pay for two properties owned by Disney isn't it?

Naw, the Marvel-Universal contract is cheap and in perpetuity for Orlando. There's literally no downside to that contract expect that they at most probably are just allowed to refurbish MSHI. I think MSHI will always be there. The value to that contract is such that Disney would have to pay a huge amount to Universal to end it. The upside is all with Universal.

As for the Simpsons contract, it'll end in a decade (give or take), but this gives Universal full warning and it'll be ready to build a replacement when that contract ends.

 

[JoeCamel]

It's kind of embarrassing for Universal to pay for two properties owned by Disney isn't it?

Nah, Universal is going to write the same check no matter who owns the IPs. Have you ever thought of how many Pink Donuts it takes to pay the tab? They are making plenty off those two properties and best of all it keeps a lot of Marvel out of WDW and all of Simpsons out.

 

[AlexanderMBush]

Nah, Universal is going to write the same check no matter who owns the IPs. Have you ever thought of how many Pink Donuts it takes to pay the tab? They are making plenty off those two properties and best of all it keeps a lot of Marvel out of WDW and all of Simpsons out.

To add, California will most likely not be able to bring Simpsons, because unlike the Marvel contract where it's only for the Eastern side of the US, USH has Simpsons already, and in a large way.

 

[Paulio]

Suppose that if a Disney/Fox deal got blocked by the DOJ and it would likely not be approved, and if Disney drops the deal, then who's gonna bid for Fox? There's a lot of articles recently written lately about the potentially dangerous impact of the Disney/Fox deal on the entire entertainment industry and it would encounter anti-trust issues along the way due to the deal being horizontal (and horizontal deals historically gets far more scrutiny than the vertical ones like AT&T-Time Warner).

 

[zg44]

Suppose that if a Disney/Fox deal got blocked by the DOJ and it would likely not be approved, and if Disney drops the deal, then who's gonna bid for Fox? There's a lot of articles recently written lately about the potentially dangerous impact of the Disney/Fox deal on the entire entertainment industry and it would encounter anti-trust issues along the way due to the deal being horizontal (and horizontal deals historically gets far more scrutiny than the vertical ones like AT&T-Time Warner).

It'll get approved I think; most likely they would just divest things that the DoJ has problems with...

Also, there's no real market where Disney would have >50% control after the purchase, and they have no vertical paytv/broadband market share. I find it difficult to believe any part of this will be blocked.

 

[Mad Dog]

Hulu might be an issue. It was when Comcast bought NBC/Universal. So that may be something that gets tweeked in a deal, in order to get government approval.

 

[zg44]

Hulu might be an issue. It was when Comcast bought NBC/Universal. So that may be something that gets tweeked in a deal, in order to get government approval.

Yeah, but that was because regulators were worried that Comcast would use its control of the largest broadband subscribership (25 million) to pressure Netflix and Amazon Prime by favoring Hulu if it had a management say in Hulu.

Most likely, that won't be a concern for Disney taking Fox's 30% since Disney already has management say with its 30%.

 

[Paulio]

It'll get approved I think; most likely they would just divest things that the DoJ has problems with...

Also, there's no real market where Disney would have >50% control after the purchase, and they have no vertical paytv/broadband market share. I find it difficult to believe any part of this will be blocked.

The problem is that Disney is already strong-arming theaters through coercion and negotiating power with several key assets of the film industry. Disney is buying several studios and companies to increase their market share, jacking up prices, and control in the industry which reduces competition, therefore meeting the definition of horizontal. This would have triggered a DOJ response, as with most horizontal mergers in the past. Don't expect it to just go down easily. There's still a lot that needs to be done.

 

[zg44]

Netflix Makes International Distribution Deal For NBC’s ‘Good Girls’ | Deadline
NBC being the first of the Big 4 alphabet networks to distribute a series overseas via streaming service ('Good Girls' with Netflix) is a pretty good indication that they aren't that interested in owning their own global streaming service (as Disney is indicating with this Fox purchase).

The problem is that Disney is already strong-arming theaters through coercion and negotiating power with several key assets of the film industry. Disney is buying several studios and companies to increase their market share, jacking up prices, and control in the industry which reduces competition, therefore meeting the definition of horizontal. This would have triggered a DOJ response, as with most horizontal mergers in the past. Don't expect it to just go down easily. There's still a lot that needs to be done.

Sure, but none of that meets the threshold for the DoJ to sue over a Disney purchase of Fox's entertainment assets.

Here's why: Disney is being extremely devious in doing this purchase before launching its global streaming services. If it had already launched its streaming services, then there might be more serious anti-trust problems given that Disney's global streaming services are expect to get to 100+ million subscribers rapidly and become a major market share participant. Combining those theoretical Disney streaming services with 60% of Hulu in 2025 would be an absolute no-go in my opinion. But by doing it before, Disney can probably get the deal through without divesting Hulu to address the point raised by @Mad Dog.

As to why this doesn't meet the threshold for blocking a horizontal merger: Hollywood studio film-making is an extremely unconcentrated and highly competitive market. There's over 700 movies that get theater releases and around 100 of those are wide releases by the major studios.

Disney releases 10 wide release movies a year while Fox releases 17-20 wide release movies a year and another 10 limited releases.

At most Disney would be getting 30% of the "wide release" market while leaving another 4-5 competitors that still release 70 other movies to wide releases (Universal, Warner, Sony, Paramount, Lionsgate).

As far as box office goes, Disney would be getting somewhere around 35-40% of the total box office, but that's still in a competitive market in terms of 5 other studios aggregating another 40-45% and another dozen or so taking most of the remainder.

That's the problem here, that there's so many other competitors still surviving. Disney would be the strongest studio in terms of production by far, but in the overall market, there's still a lot of other producers.

AT&T-T Mobile merger was halted because it would have reduced the overall market to only 2 other mobile competitors (Verizon and Sprint) while giving AT&T roughly 50% of the overall market.

Comcast-Time Warner Cable was halted because it would have given Comcast roughly 75% of the overall high speed internet market and left it with only 2 major competitors in the overall broadband market: Comcast would have had 35 million subscribers, AT&T around 15 million, and Charter 9 million.

The problem is there's lots more competitors in the film production market and Disney can also argue for an expanded market definition to include a company like Netflix that has 0 theater releases but produces 100 films a year of which around 3-4 cost $40-100 million which would arguably get a wide release with any other studio...