- CEO seeks hit movies, TV shows — and pipes to viewers’ homes
- Pay-TV services like Sky would become part of Disney’s empire
When news broke last month that Walt Disney Co. was in talks to buy a large of part of 21st Century Fox Inc., the first question many investors had was, why are the Murdochs selling?
Then came the second: Why is Disney buying?The $50 billion deal, which could be announced this week, would mark a significant turning point in the empire-building career of Fox’s founder and executive chairman, 86-year-old Rupert Murdoch. It would also be a defining moment for Disney and its Chief Executive Officer Robert Iger.
Iger has built a reputation over the past 12 years for making bold bets, including the $7.4 billion he paid for Pixar animation just months after he became CEO. But this would be much bigger, giving the home of Mickey Mouse and Princess Elsa the 20th Century Fox film studio, the FX network, 39 percent of Britain’s Sky Plc TV service and other assets. It’s just the kind of consolidation media investors have said was long overdue, particularly in film.
“There’s a lot of synergies in doing this, particularly in global distribution,” said Mario Gabelli, whose Gamco Investors Inc. holds more than $350 million of Fox shares. “If I’m Disney I love the distribution globally, India, satellites in Italy, Germany, England. This is good stuff.”
Disney could shave as much as $500 million annually in costs by combining businesses, according to Alan Gould, an analyst with Rosenblatt Securities Inc.
Half of that would come from the studio side, where Disney could close and sell the Fox lot in Los Angeles, he said in a Dec. 4 note.The timing is opportune, Gould said, because other potential bidders for Fox, including Verizon Communications Inc., may be hesitant to do a big deal given AT&T Inc.’s current fight with the Justice Department over its proposed $85.4 billion acquisition of Time Warner Inc. Comcast Corp. said…
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