The Walt Disney Company officially took ownership of several 21st Century Fox entertainment assets early this morning after its $71.3 billion acquisition was finalized. Now, the company is full steam ahead on streaming.
Disney’s priorities now include ESPN+, the Disney+ streaming video-on-demand service launching in late 2019, and its new majority ownership stake in Hulu.
“This is an extraordinary and historic moment for us—one that will create significant long-term value for our company and our shareholders,” said Bob Iger, chairman and CEO of Disney, in a statement. “Combining Disney’s and 21st Century Fox’s wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era.”
Disney will be taking over Twentieth Century Fox, Fox Searchlight Pictures, Fox 2000 Pictures, Fox Family and Fox Animation; Fox’s television creative units, Twentieth Century Fox Television, FX Productions and Fox21; FX Networks; National Geographic Partners; Fox Networks Group International; and Star India; along with Fox’s interests in Hulu, Tata Sky and Endemol Shine Group.
Disney is currently in the process of selling off Fox’s 22 regional sports networks as decreed by the U.S. Justice Department. Disney is expecting that the integration of Fox’s businesses will lead to at least $2 billion in cost synergies, which could mean job cuts and restructuring across the corporation.
As Disney gets bigger, Fox is unveiling its new slimmed-down operations focused on news, sports and broadcast businesses, including the Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, the Fox Television Stations Group, and cable networks FS1, FS2, Fox Deportes and Big Ten Network.
With the formalities out of the way, Disney will now shift its focus to an investor day on April 11, when the company will unveil more details about Disney+.
Here’s what Disney has already said about Disney+: it will feature content from Disney, Pixar, Star Wars, Marvel and National Geographic along with Disney’s library of film and television content. Original series on the service will include a live-action Star Wars series called “The Mandalorian,” a series based on the “High School Musical” movies and a series based on Pixar’s “Monsters, Inc.” The service will also house original films.
Iger saw an early prototype of the app—which will be built on the same BAMTech platform as ESPN+—and said it has “elegant navigation, personalization and content, segmented primarily by our core brands namely Disney, Pixar, Marvel, Star Wars and the soon to be added National Geographic.”
“It will blend library product with original content under these five brand banners and we are confident it will be a compelling consumer proposition,” Iger said.
Bernstein analyst Todd Juenger said in a recent report that details may not abound on April 11, but he hoped that Disney would reveal pricing for the service along with more details about the sort of investment the company has planned for Disney+.
The expected increase in expenses for Disney surround its streaming aspirations materialized last quarter as the company reported a widening operating loss for its direct-to-consumer business segment.
MoffettNathanson analyst Michael Nathanson said Disney will likely see expanded operating income impact in 2020 due to the loss of licensing revenue as the company redirects its big films to Disney+. But he argued that as long as the economy holds and Disney’s digital plans are well articulated, the market will look past any dilution for Disney in 2019 and 2020, focusing on 2021 instead.
“While Disney+ doesn’t have a paying subscriber yet, the company will own an unrivaled film and TV library, multiple mass marketing vehicles to active consumer interest and a technology platform in BAMTech that seems to be ready to go,” Nathanson wrote in a recent research report.