Walt Disney Co Buys Key Fox Assets in Its Largest Deal Ever

Disney's $52 billion buy emboldens its streaming ambitions

By Robert Martin, InvestorPlace Writer

Disney stock

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It’s official, Walt Disney Co (NYSE:DIS) is buying the entertainment assets of Twenty-First Century Fox Inc (NASDAQ:FOXA, NASDAQ:FOX) in a deal valued at $52.4 billion. As Disney buys Fox, it will give FOX stock holders 0.2745 shares for every share, valuing FOX stock at $29.54. (That’s a near-10% discount to Fox’s pre-market price of $32.40.)

Disney CEO, Bob Iger, will remain captain of the ship through 2021. In an interview with Good Morning America, Iger notes that James Murdoch will assist in the transition as Disney buys Fox and Iger will “[discuss] whether there is a role for him or not at our company.”

The deal leaves Fox with its broadcast networks and stations — Fox News, Fox Business, etc. — essentially stripping the company down into a more focused media company. The “new” Fox will also become newly listed again and shares will be given to current FOX stock owners.

Shares of Twenty-First Century Fox are down half a percent while DIS stock is off nine-tenths of a percent as of this writing.

Disney Buys Fox

That price tag makes this acquisition even larger than Disney’s Pixar and Marvel buys combined, and for good reason. Disney’s purchase includes monster Hollywood properties like X-Men, Avatar, The Simpsons, Deadpool and Fox Animation hits such as Trolls and Ice Age. Disney will also own Fox’s near-40% stake in the European pay-tv giant Sky, Star India and even FX.

As Disney buys Fox, it also inherits Fox’s 30% stake in Hulu, giving the House of Mouse majority control over the streaming company. As Recode notes, that could mean big changes are in store for Hulu.

It may also mean that Hulu’s other owners, specifically Comcast Corporation (NASDAQ:CMCSA), may find it less attractive to continue putting their properties on the streaming service now that it’s Disney’s stepchild.

Bottom Line on the Disney-Fox Deal

This deal is yet another shot across the bow at Netflix, Inc. (NASDAQ:NFLX). While Bob Iger doesn’t expect the new Disney to “quickly” measure on the “scale of Netflix,” he’s already branded DIS as a major competitor:

“To the consumer, not only will they be getting more great content, high-quality content, but they’ll be getting it in ways that they demand. Innovative ways that today’s consumer requires really in terms of increasing their consumption and enjoying their consumption.”

Disney had an extensive collection of entertainment hits before this deal, but as Disney buys Fox it now has more than enough to audience-stealing shows and films to fill its 2019 streaming network with. And it plans to offer that streaming service well below Netflix’s prices.

Shares of NFLX, however, are up half a percent as of this writing.

As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2017/12/disney-buys-fox-in-its-largest-deal-ever/.

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