5 Takeaways from the Disney-Fox Merger
- What is it? This is a huge merger involving two brands that you know and love. The Walt Disney Co. is acquiring most of the assets of 21st Century Fox for $52.4 billion in stock, or $66.1 billion after the assumption of debt, creating a content behemoth that will have the power to reshape the sports and entertainment landscapes. Their combined heft will give them even more leverage over cable companies and internet service providers, while strengthening their online video streaming services, according to experts at Wharton and elsewhere.
- What will Disney get? If the deal passes antitrust muster (if it stands the test of Federal Trade Commission antitrust laws that prohibit corporate mergers if they give one company too much power in the market, which means consumers wouldn’t benefit from actions like competitive pricing), Disney will get Fox’s film and TV studios, Star India and a 39% stake in European pay TV giant Sky, 22 regional sports networks, as well as entertainment properties including “The Simpsons” and Avatar, cable networks FX and National Geographic and a controlling stake in online video service Hulu. Fox is retaining its national sports channel, its broadcast and news operations, local TV stations and the Big Ten sports network. While the merger would help Disney grow its annual revenues from its current $55.1 billion to $74.1 billion, Fox would downsize correspondingly from $29 billion to $10 billion, according to a Wall Street Journal report. Herbert Hovencamp, a Penn Law professor who is also a Wharton professor of legal studies and business ethics, says the merger “will produce a much more powerful Disney, able to compete better with streaming services like Netflix and Amazon.” However, Hovencamp, who is an antitrust law scholar, expects the merger to attract “close review” from regulators, especially with the combination of ESPN and several Fox sports networks.
- What does this mean for the industry and for Fox? A more powerful Disney with the Fox assets could trigger other such deals, according to Wharton professor of operations, information and decisions Jehoshua Eliashberg. “It is likely to lead to more mergers and acquisitions and fewer, but more powerful, competing conglomerates.” Hovencamp says that Netflix as the market leader in its space could find itself as a merger target. As for 21st Century Fox: “Fox either had to get a lot bigger in entertainment and in streaming or get out,” said University of Michigan professor Erik Gordon during a visit to the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. “Being in the middle is exactly where you don’t want to be.”
- What about Disney’s video streaming strategy? As Netflix, Google, Facebook and Amazon strengthen their muscles in entertainment, Disney will be able to compete against them better with the Fox assets in its fold, notably with a bigger voice in Hulu. Its larger content repertoire would give Disney a more robust online video service. Disney also recently announced new online streaming services as well as “ESPN Plus,” a streaming service slated for spring 2018, and a Disney-branded service in the latter half of 2019.
- Where does Mickey play into all of this? The power that Disney would get with the Fox assets also goes beyond making money from content, says Hemant Bhargava, chair in technology management at the University of California at Davis. “Disney’s business model … is about getting people to recognize [its brand] and then selling them toys, clothing, [tickets to] theme parks,” he notes. “As long as Disney is able to capture consumers through streaming but not necessarily make a lot of money, that’s okay because they can then monetize those consumers and the brand in other ways.” In other words — see you at Disney World.
Related Links
- Merger Press Release
- WSJ: Disney Agrees to Buy Key Parts of 21st Century Fox
- K@W: Can Disney’s Bid for Fox Overcome Antitrust Concerns?
- K@W: What Will Really Happen If the FCC Abandons Net Neutrality?
- Federal Trade Commission Guide to Antitrust Laws
Conversation Starters
What prompted the Disney-Fox merger? Give at least three reasons why the merger might make sense for both companies.
What does it mean that the deal must pass “antitrust muster?”
Net neutrality also factors into the Disney-Fox merger. While it is not addressed in this summary, it is addressed in the longer K@W article about the merger cited in Related Links. What is net neutrality and how does it influence this deal?
1. The merger was prompted because the 2 companies realized that they would get more “leverage” by joining as one. Also, Disney would get almost 25 billion dollars in profit a year. The merger could also lead to other deals that could benefit the company.
2. The deal passing “antitrust muster” means that the government has to approve of the merger for it to be legitimate.
3. Net neutrality is the rule saying that everyone on the internet gets treated equally. For example, rich people and poor people pay the same price for Netflix. It influences this deal by controlling the future online services for Disney and Fox by making prices same for everyone.
What prompted the Disney- Fox merger was that their combined heft would give them both more leverage over cable companies and internet service providers. While doing that it also strengthens their online video streaming services.
The antitrust muster is if the deal passes the test of Federal Trade Commission antitrust laws, Disney will get all it’s assets said to be given.
Net Neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source without favoring or blocking particular products or websites. In regard to this deal, this principle controls their future online services by making prices the same for everyone.
1. The Disney-Fox merger was prompted by both companies wanting more leverage over other cable and internet-service providers. The merger will also strengthen their online video streaming services.
2. The Federal Trade Commission will look into whether this merger will give this company too much power or influence on the market, and if it does, it will not let the deal happen.
3. Net neutrality is the principle that Internet service providers must treat all data on the Internet the same. The impact of net neutrality on this deal is uncertain, as some in the FCC want to end net neutrality so we do not know how net neutrality can influence the deal for sure.
What prompted the Disney-Fox merger was that will give them more authority in over cable companies, strengthen their online services, and create a new sports picture on T.V
When the deal must pass through “antitrust muster” it must go through government regulations to make sure that this deal will not create a monopoly over the markets.
Net neutrality is where the government no longer have control on how much internet companies charge for internet and their services. This affects the deal because they will be able to charge however much they want because they are in the internet industry.
What prompted the Disney-Fox merger? Give at least three reasons why the merger might make sense for both companies.
What prompted the Disney-Fox merger was that they would get more power as one, the companies will get a lot more profit, and the merger will also strengthen streaming services online.
What does it mean that the deal must pass “antitrust muster?”
The deal must pass “antitrust muster” means that the Federal Trade Commission will look into the merger and make sure they don’t gain too much power or else the merger will be stopped.
Net neutrality also factors into the Disney-Fox merger. While it is not addressed in this summary, it is addressed in the longer K@W article about the merger cited in Related Links. What is net neutrality and how does it influence this deal?
Net neutrality is the principle that internet service providers must treat all data on the internet the same. The influence from net neutrality is that they can charge users whatever they choose because they are in the internet business.
1. I think what prompted the Disney-Fox merger is that streaming has become a highly profitable market, and both companies will be able to make money from it by combining their resources. Disneys three reasons to merge would be: 1. more TV networks to aquire, 2. more film content 3. Hulu. Foxes three reasons to merge would be: 1. a powerful partner 2. a way to compete with streaming services 3. a lot of financial assets.
2. The deal passing the “antitrust matter” means it must be approved by the government. This is to prevent one company from having too much power and control over a market. It also makes sure that things like competitive pricing can benefit customers.
3. Net neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source. It influences this deal because an important aspect of this deal is to compete in the streaming market. Since net neutrality has been repealed, these companies can charge however much they want.
1. The merger was facilitated by both companies wanting more leverage over other cable and internet-service providers. The merger will also strengthen their online video streaming services.
2. The deal must pass “antitrust muster”. This means that the Federal Trade Commission (FTC) will look into the merger and ensure that they don’t gain too much power or else the merger will be stopped.
3. Net neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites.
What prompted the Disney-Fox merger? Give at least three reasons why the merger might make sense for both companies.
1)The Disney-Fox merger will give Disney more authority in other cable companies, strengthen their online services, and create a new sports picture on T.V
What does it mean that the deal must pass “antitrust muster?”
2) The deal must pass antitrust muster, means that the FTC “Federal Trade Commission” will look into the merger and authorize it so they don’t gain too much power over the market, or else the merger will be canceled
.
Net neutrality also factors into the Disney-Fox merger. While it is not addressed in this summary, it is addressed in the longer K@W article about the merger cited in Related Links. What is net neutrality and how does it influence this deal?
3) Net neutrality is the principle that Internet service providers must treat all data on the Internet the same. The impact of net neutrality on this case is uncertain, as some people in the FCC want to end net neutrality so we don’t know how net neutrality would affect this deal.
1. The merger might make sense in both companies because it will alter the sports and entertainment landscapes. It will give them more leverage over cable companies and internet service providers. It will also strengthen theri online video streaming services.
2. The deal passing the “antitrust matter” means it must be authorized by the government
The deal has to go through a test of Federal Trade Commission. This prevents one company from having to much power and monopolizing the market. Also it makes sure that competitive pricing benefit the customers.
3. Net Neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source without favoring or blocking particular products or websites. The influence from net neutrality is that Disney-Fox can charge users anting they choose because they are in the internet field of business.
The Disney-Fox merger was prompted by the fact that their combined heft will give them even more leverage over cable companies and internet service providers. It will also strengthen their online video streaming services. Disney will get a lot out of the merger. Such as, Fox’s film and TV studios, Star India, Avatar, Hulu, and much more. Fox studios had to make this deal. It was their only choice to stay as an entertainment studio. If not it would downsize from $29 billion to $10 billion. How could a big company like Fox be forced out of entertainment?
The deal must not be making Disney or Fox too powerful. Otherwise, it would be illegal. The law states “if it stands the test of Federal Trade Commission antitrust laws that prohibit corporate mergers if they give one company too much power in the market.”
Net neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites. It influences this deal positively. The Internet service providers cannot withhold their service due to their beliefs about the merger. Therefore, it is not a problem for Disney-Fox.
1) The Disney-Fox merger was prompted by the power that Disney would have and the assets that it would control and on Fox’s part the amount of money that was offered is almost irrecusable. The merger makes sense for both companies because Disney is thinking about joining the upcoming streaming market and Disney now controlling Hulu is an easier way to join the competition, Fox will still maintain some of its assets but most is owned by Disney, which facilitates an easier market exit. Another reason as to why this deal makes sense is that Disney is trying to get all of Marvel’s rights, and what is left is in control of Fox and Sony, so they now only have Sony to worry about, as well as getting the right to “A New Hope” the only Star Wars movie that Disney did not have the right to.
2) The meaning of “antitrust muster” is that the purchase of Fox by Disney does not mean that Disney will have the majority of market power because that is against the law.
3) Net neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites. This influences the deal because as Disney is trying to start their streaming network and net neutrality can make the streaming network have better or worse results because it influences the ability of all service providers to grant access to all content without favoring or blocking any source, therefore not giving an edge to Disney or any competition in the streaming market.
Disney and Fox merged in order to gain leverage over other competing companies which helps Disney increase revenue. The merge also helps strengthen their online video streaming services against competitors like Netflix and Amazon. Disney will also be given more brand exposure and as a result they will become better suited to selling their products to customers
The deal must pass “antitrust muster”, meaning it must pass the Federal Trade Commission’s antitrust laws where one company holds too much power over the other and it reduces the amount of competition between other companies. As a result, consumers won’t be able to have multiple options where the different companies battle it out with lower pricing and more benefits to make it more appealing to consumers, and instead having only the option of one large company.
Net neutrality is something that allows broadband providers to treat internet traffic differently to maintain and protect their network. It tries to protect the needs of internet service providers to manage their networks but also limiting their power.This might affect the merge as net neutrality as online video streaming services won’t be able to effectively reach customers of the internet service providers, and they will have to pay extra fees to.
1. What prompted the Disney-Fox merger? Give at least three reasons why the merger might make sense for both companies.
The Disney-Fox merger could make sense for both companies because they will be more powerful together, improve streaming online services, and companies will make more profit.
2. What does it mean that the deal must pass “antitrust muster?”
The deal must pass “antitrust muster” means when one company is too powerful over the other company and helps the competition between others.
3. Net neutrality also factors into the Disney-Fox merger. While it is not addressed in this summary, it is addressed in the longer K@W article about the merger cited in Related Links. What is net neutrality and how does it influence this deal?
Net neutrality is allowing everyone to use the internet and there are no favorites or interference between any networks which helps internet traffic. This helps because all internet service providers will not be affected by others and all are the same with no extra fees or something.
What prompted the Disney-Fox merger?
The Disney-Fox merger will give more authority in other cable companies making them powerful in the industry. Which then would strengthen their online services competitors Netflix & Amazon. Fox can then dedicate more time to recreate a new sports landscape for the media.
What does it mean that the deal must pass “antitrust muster?”
Means that Disney-Fox merger can not be so powerful to not allow consumers to not have options between competitor pricing.
What is net neutrality and how does it influence this deal?
Net neutrality is the concept that Internet service providers should allow entry to all content and applications in any case of the source, and without preference or blocking specific products or websites.
What prompted the Disney-Fox merger was the idea that they would earn more from coming together, than being apart and against each other. It also would benefit Disney in the way of gaining more profits and benefits Fox in the way that there may be more deals on the table that may benefit them and Disney. This deal, however, must pass through the antitrust muster meaning that one company cannot have too much power over the other. With net neutrality giving people equal rates on certain websites, it will influence them by saying that anyone can use the services provided if eligible.
1. What prompted Disney, and Fox to merge was the added benefits they’d receive from this. They’d gain an overall advantage’s in aspects such as the sports, and entertainment landscape; As well as the cable, and internet services. Merging would give Disney numerous assets such as, not limited too, Sports channels, ownership to the Simpsons, and Avatar.
2. For it to be passed the government would have to approve of it. If a company receives to much power it’ll most likely be declined
3. Net neutrality (is the principle that governments should mandate Internet service providers to treat all data on the Internet the same) prevents internet services such as fox and Disney from price fixing however they want. If net neutrality where to be repeal, this would allow them to block any outside sources they don’t find appropriate, an examples of this would be preventing their users from seeing ads from apposing competitors.