Disney’s acquisition of 21st Century Fox could drastically reshape the industry

May 20, 2019 — by Emilie Zhou

On March 20, Disney acquired 21st Century Fox for $71.3 billion, marking a change that could radically reshape the entertainment and film industry. Although the deal does not include Fox Corp, which consists of Fox Sports, Fox News and the Fox TV network, Disney now owns Fox Searchlight, the FX and National Geographic channels, Fox’s TV production company, most of Hulu and a variety of popular films and movies, such as the popular Marvel series.

With the merger between Disney and Fox, Disney may now have a complete monopoly over the Hollywood movie landscape, which could hurt the four other remaining major film companies — Warner Bros., Sony, Universal and Paramount — as Disney seeks to expand their empire. There have been mergers in Hollywood before, such as Comcast’s acquisition of NBC Universal and AT&T’s deal with Warner Bros., but the merger between Disney and Fox has proven to be the largest and possibly the most impactful union yet.

“There’s rarely been an acquisition of this size or a union of two such storied brands with distinct cultures,” wrote Brent Liang, Cynthia Littleton and Joe Otterson of Variety Magazine said. “If the two companies are able to successfully join forces and become an entertainment powerhouse, it could provide a roadmap in an industry that is likely to consolidate further.”

When the Walt Disney Company confirmed the purchase back in December 2017, people had mixed responses and some from the Atlantic immediately began to fear that the “Disney Death Star” would soon become a “global colossus.”

However, the acquisition of 21st Century Fox may be beneficial in helping Disney compete with new rival companies, especially streaming companies like Netflix that have been gaining popularity among viewers for their wide range of content and easy accessibility.

“Disney’s acquisition of Fox is its first shot in the ongoing streaming wars — a sign that the company is building an arsenal to take on Netflix and any other tech giant that’s muscling into the entertainment business,” author Derek Thompson from the Atlantic wrote.

In recent years, Netflix has also produced numerous successful films that have competed with the works of traditional film companies, like Disney and Fox. For example, Netflix’s “Roma” has received a number of awards, including an Oscar. One of Netflix’s most popular and successful productions, “Bird Box,” has been viewed by more than 80 million households, proving the potential Netflix and other streaming companies have in dominating the entertainment industry.

Earlier this year, Netflix reported that it had over 139 million subscribers globally. On the other hand, Disney viewership for traditional television has dropped 51 percent among Americans who are between ages 12 to 24 since 2010, and this decline will only accelerate as people switch from cable subscriptions to online streaming services.  

Compared to other film companies, Netflix has also been producing works at a faster rate. According to the Atlantic, Disney only released 10 movies in 2018 while Netflix released 93. However, by acquiring Fox, Disney has “gained ground in [a new] sphere” that could help Disney maintain their place in the evolving industry. For example, Disney has already made significant progress with their new streaming service, Disney+, but other studios and media companies, like the four other major film companies, that are more “old-fashioned” may also get “left behind in the race.”

The merger has also led to changes and shifts in leadership in both Fox and Disney. Fear of layoffs quickly spread among the employees after the merger and as many as 4,000 jobs may be lost during the transition. Senior leadership positions in marketing and distribution have already been affected and several executives from both Disney and Fox have chosen to leave after the merger.

“There are good reasons for people to be nervous,” media analyst Hal Vogel said. “There are lots of highly regarded, well-paid executives at both companies, but in some cases there will be two people with the same job. That means there’s only room for one of them.”

In addition, Disney has already dropped several Fox projects, such as Fox 2000 which was responsible for the popular films “Love, Simon” and “Hidden Figures.”

Not only could the horizontal merger between these two companies create a dangerous force in the entertainment industry, but it may also pave the way for other similar unions as more companies start to follow in Disney’s footsteps. These large-scale mergers will eventually decrease competition among rivals and possibly limit future growth for these industries.

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