The merger impacts more than just the MCU
On March 20, 2019, The Walt Disney Company acquired most of 21st Century Fox’s assets. Ever since I first heard news of the merger, I’ve been against it. I already wrote about how I feel about the X-Men joining the Marvel Cinematic Universe, but this acquisition affects more than just Marvel properties. In fact, this merger will undoubtedly have a huge impact in the entertainment industry.
Acquisition overview
The acquisition of Fox assets by Disney was first reported on in late 2017, and according Disney Chairman Bob Iger, the merger happened because Disney wanted Fox’s library of content to add to its new streaming platform, Disney+. Disney, like other entertainment studios have been moving to direct-to-consumer business models as they launch streaming services and leave behind traditional movie and television distribution models.
After Disney acquired a majority stake in BAMTech to develop their streaming capabilities, the idea to acquire Fox came to fruition.
During 2018, Disney faced competition from Comcast in a bidding war for Fox assets, but Disney came out on top with a $71.3 billion offer. With its acquisition, Disney now has the majority of 21st Century Fox’s entertainment assets, including 20th Century Fox, FX, National Geographic and Fox’s 30 percent share in Hulu. The merger also formed Fox Corp, a new company which is made up of the assets Disney didn’t acquire.
Notably, this deal also means that Marvel has the rights to include the X-Men and Fantastic Four in motion picture properties, along with the other Marvel properties.
The purchase could result in over 4,000 lost jobs from redundant positions as it is a horizontal merger, which is when companies in the same industry combine, rather than a vertical merger, which is when companies in different industries, often ones who buy from each other, combine.
Impact on entertainment
Disney’s acquisition of Fox assets gives them even more power and control in the entertainment industry. In 2019, Disney and Fox films dominated the box office with an approximate 38 percent of domestic moviegoing. Disney produced, distributed or co-produced the top eight box office films. Warner Bros. was Disney’s top competitor, accounting for 13.8 percent of the U.S. market.
With massive box office power, Disney can essentially dictate when other studios will debut their own films. If Disney sets a release date for a “Star Wars” film that is near the release date of another studio’s film, then that studio has the option of changing its release date or to compete with a “Star Wars” film, forcing other studios to schedule around Disney if they want their films to not have to compete with the media giant. With Disney’s acquisition of Fox, there will now be less competition than before.
Disney also now controls two popular streaming services. With its acquisition of Fox’s share of Hulu, Disney gained a controlling 60 percent ownership of the popular streaming service. In November 2019, Disney+ had a successful launch and is reported to have over 50 million subscribers in May 2020.
The acquisition will lead to fewer movies being released. In 2018, Fox released 12 films. Iger has reportedly said that Disney will release five or six Fox movies a year, cutting Fox’s output in half.
Once the acquisition was finalized in 2019, Disney began shifting and reorganizing the Fox release schedule, and many films in development were canceled. Disney has already made major changes to some anticipated releases and will continue to have a massive influence in the entertainment industry.
Conclusion
The acquisition of Fox assets by Disney has a few pros, but that is outweighed by the number negative impacts it has and will continue to have.
It may be exciting for Marvel fans to finally see Marvel Studios adapt X-Men and Fantastic Four properties, but even that will take away from the exciting potential of lesser-known characters.
Overall, the Disney-Fox merger will change many things in the entertainment industry and will have a lasting impact.
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