Walt Disney has today (Thursday) sealed a $52.4bn (€44.2bn) deal to acquire a significant share of rival media company 21st Century Fox’s business interests, an agreement that is set to see it ultimately secure control of European pay-television group Sky and media company Star India.
The all-stock deal has a total value of $66.1bn, with Disney assuming $13.7bn in 21st Century Fox debt.
Disney’s international reach is set to greatly expand through the addition of Sky, which serves nearly 23 million households in the UK, Ireland, Germany, Austria and Italy; Fox Networks International, with more than 350 channels in 170 countries; and Star India, which operates 69 channels reaching 720 million viewers a month across India and more than 100 other countries.
Prior to the close of the transaction, it is anticipated that 21st Century Fox will seek to complete its planned acquisition of the 61 per cent of Sky it does not already own. Fox is currently wrapped up in regulatory talks in the UK to seal that deal.
21st Century Fox said it remains fully committed to completing the current Sky offer and anticipates that, subject to the necessary regulatory consents, the transaction will close by June 30, 2018. Assuming 21st Century Fox completes its acquisition of Sky prior to closing of the transaction, Disney would assume full ownership of Sky, including the assumption of its outstanding debt, upon closing.
Combining with Disney are 21st Century Fox’s film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000, and its television creative units, Twentieth Century Fox Television, FX Productions and Fox21. Disney will also acquire FX Networks, National Geographic Partners, Fox Sports Regional Networks, Fox Networks Group International and Fox’s interests in Hulu, Tata Sky and Endemol Shine Group.
However, 21st Century Fox will separate its US sports channels Fox Sports 1 and 2, the Big Ten Network of the US college sports conference, Fox Broadcasting network and stations, Fox News Channel and Fox Business Network into a newly listed company that will be spun off to its shareholders.
“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” Bob Iger, chairman and chief executive of the Walt Disney Company, said.
“We’re honoured and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”
Today’s announcement comes after US telecommunications company Comcast this week exited the race for 21st Century Fox’s business interests. Comcast had been linked as one of main interested parties in such a deal, but said it had ended its interest in a statement issued on Monday.
Iger was due to retire from his position at Disney in 2019. However, at the request of both 21st Century Fox and the Disney Board of Directors, Iger has agreed to continue as chairman and chief executive through to the end of 2021.
Commenting on the deal, Rupert Murdoch, executive chairman of 21st Century Fox, said: “We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry.
“Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”
The Boards of Directors of Disney and 21st Century Fox have approved the transaction, which is subject to shareholder approval by 21st Century Fox and Disney shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act, a number of other non-United States merger and other regulatory reviews, and other customary closing conditions.