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Disney gets hold of part of Rupert Murdoch’s empire

Ⓒ GETTY IMAGES NORTH AMERICA/AFP – Drew Angerer – | Launch of the new Star Wars produced by Disney in New York on December 14, 2017

Disney announced on Thursday that it would buy back much of the assets of 21st Century Fox (Murdoch Group) in response to the Internet giants’ offensive on content and the disruption of the audiovisual landscape in the United States.

The legendary company founded by Walt Disney in 1923 will get their hands on 20th century Fox movie studios and bring them together with their own studios. She will also acquire several TV channels, but not the news channel Fox News.

The transaction amounts to $ 52.4 billion and climbs to $ 66.1 billion with the recovery of debt.

Disney and 20th Century Fox are going to have a tremendous punch in the movies. Both studios recently produced the “Crime of the Orient-Express”, “Kingsman: The Golden Circle”, “Logan”, “The Planet of the Apes” or “Hidden Figures” (Fox), “Pirates of the Caribbean “,” Beauty and the Beast “,” Cars 3 “and” Stars Wars: The Last Jedi “(Disney).

In television, in addition to its own ABC channels and the ESPN sports channel, Disney will now own FX and National Geographic and will expand internationally by owning the Indian Star channels and the 39% owned by the Fox. in the European television operator Sky, present in the United Kingdom, Ireland, Germany, Austria and Italy.

– Compete with Netflix and Amazon –

These assets are part of Disney’s CEO Bob Iger’s strategy of turning the group into a media and entertainment giant that can compete with Netflix, Amazon, Facebook and Apple.

According to investment firm Raymond James, 31% of Americans believe that streaming services (Amazon, Apple Video, Hulu …) are now their primary source of video content.

The operation “strengthens” Disney “in content and entertainment,” said the Californian group on Thursday, which plans to launch soon its own service of “streaming” to build direct relations with the spectators without having to pass by the cable operators.

Disney is taking control of Hulu, a popular streaming service in the United States, by recovering the participation of the Fox that will add to the one he already holds.

“This gives them a platform to compete against Netflix and Amazon, especially internationally,” said independent expert Alan Wolk. And Disney will have access to audience data, which will allow it to refine its content offering, he adds.

The mandate of the Disney CEO, to whom some lend presidential ambitions, has been extended until 2021 despite rumors announcing the arrival of James Murdoch, son of Rupert, in the management team to take his succession. There will be discussions “about whether there is a role for him or not in our business,” said Iger about James Murdoch.

The director also hopes to revive the offer of Disney in television when American viewers abandon the cable TV and satellite, very expensive in the United States to move to other media.

The transaction also marks a major turning point in the media empire built by 86-year-old Rupert Murdoch on a mix of popular news and scandals.

– Difficult integration? –

The billionaire of Australian origin, who has sold much of his empire’s orders to his two sons, James and Lachlan, will keep only the great American Fox channel, close to Donald Trump, local stations, television channels information and sports channels like Fox Sports. These assets will be consolidated into a new entity listed separately on the stock market.

He will also still have control of his newspapers (The Wall Street Journal and the New York Post in the United States, the Sun, the Times and the Sunday Times among others in the United Kingdom) which make up the independent company News Corp.

The financial terms of the agreement signed with Disney provide that the shareholders of 21st Century Fox will hold 25% of the new Disney.

However, it still remains to get the green light from the US competition authorities, a step that looks arduous because most American media will be held by a handful of large groups: Comcast (NBCUniversal), Disney-Fox, Viacom, Sony Pictures and Lions Gate.

The US Department of Justice has recently blocked the $ 85.4 billion takeover of Time Warner (Warner Bros. Film Studios, the HBO pay-TV package …) by the AT & T telecom operator and it could have to separate from assets like the CNN news channel, a favorite target of President Donald Trump.

The rating agency S & P Global Ratings said Thursday that the main difficulty for Disney will not only integrate the activities of 21st Century Fox to his own, but also to address the concerns of the competition authorities that may require divestiture in exchange of their agreement.

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