Why has Disney bought a large share of 21st Century Fox?
Disney is a successful conglomerate company, established in 1923, where it was first known as the production company for the ‘Alice’s Wonderland’ cartoons. Today, not only are they one of the largest names in entertainment, they now own businesses that cover distribution and consumer products, increasing their company’s horizontal integration.
Knowing this, it becomes clear why they were happy to buy a large share of 21st Century Fox, but what’s in it for Rupert Murdoch, apart from a large amount of money?
It was agreed that Disney would purchase Fox’s film and television studios, regional sport networks, the 39% stake in Sky, and also Star India which will increase Disney’s global reach, as well as many other investments.
Buying this share of Fox also means that Disney will obtain many high-grossing films for their back catalogue, such as the original Star Wars movies, the Marvel superhero pictures, Avatar and Deadpool, as well as TV hits such as Modern Family and The Simpsons. As Disney already owns the new Star Wars films and Marvel Entertainment, it makes sense that they would look to add the original films to their back catalogue.
There’s plenty of speculation about why Murdoch chose to sell his company to Disney, but it is clear to see that there are obvious benefits for him and the remaining company, which will be called New Fox. New Fox will be consolidating its efforts to focus on broadcasting and publishing news, as well as live sport events in the US. This allows Murdoch to focus his company back towards how he started it. A business that grew from a newspaper he inherited from his dad.
Was his plan always to develop such a successful company that he knew he would be able to sell for billions in the future? The competitive nature of the media industry could also have played a part in his decision with him now not having to worry about how 21st Century Fox’s film arm industry would have to fight against companies like Disney, to make a profit. Murdoch himself has said that ‘this move isn’t a retreat, it’s a pivot.’ This causes me to believe that he is an incredibly intelligent business man who knows that he will benefit from focussing his business on what he originally intended it to be. Handing the New Fox business down to one of his son, Lacklan. Succession is plainly important for the 86-year-old. But he leaves another son, James, seemingly without a very senior role at the moment. The sale is a refocusing of activity on what Rupert Murdoch likes best – news and sport. Will the empire building start all over again?comments powered by Disqus