In the wake of Disney’s newly proposed $52 billion purchase of 21st Century Fox assets, other media industry companies will be scrambling to add scale and keep pace, according to Barclays.
“Disney's announced transaction last week is likely to increase the degree of urgency among others in the industry to scale up. This could involve horizontal and vertical permutations as the desire for direct retail distribution appears to be quite high among studios. Given this, the likelihood of Disney's peers objecting to the transaction appears to be low at this stage, especially given that other permutations could be in the pipeline,” wrote Barclays analyst Kannan Venkateshwar in a research note.
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Disney is buying Fox’s film businesses including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000, as well as television creative units Twentieth Century Fox Television, FX Productions and Fox21.
Disney will also acquire FX Networks, National Geographic Partners, Fox Sports Regional Networks, Fox Networks Group International, Star India and Fox’s interests in Hulu, Sky plc, Tata Sky and Endemol Shine Group, according to a news release.
The deal will give Disney an expanded content library to offer through its branded streaming service (launching in 2019) and Hulu, as well as increased distribution in Europe and Asia.
The Disney-Fox deal comes as AT&T is poised to grow substantially if its $85 billion Time Warner merger goes through, and as Comcast-NBCUniversal is anticipating the behavioral conditions of its merger being lifted in 2018.
Venkateshwar also said that smaller studios appear to view the Disney transaction as being good for the rest of the industry given that the shrinking of the post-transaction movie slate at Disney will open up more release windows for others.