By Alisha Singhal
The news of Disneys acquisition of 21st Century Fox is creating ripples across the world, as the deal is set to disrupt the media industry. This includes assets such as the dozen of cable networks in US, Europe and profitable family of channels under Star India for a whopping $52.4 billion.
Catching up with the rivals
Disney, under the leadership of Bob Iger, is set to acquire most of Rupert Murdoch Empire. While the deal will take its own good time to be formalised and implemented, Hollywood has been well shaken up by this horizontal merger of these two media houses. This daring bid by Disney is also its attempt to empower itself technologically to challenge growing giants in the streaming world such as Netflix and Amazon.
Multiple reasons made Murdoch exit the media business that he had ruled for years, letting Disney decide the future course of action. Murdoch has, however, decided to retain its US news and sports channels (Fox News and Fox Sports) which do not deal with competition directly with any streaming services.
Decision to sell
Murdoch and Iger share a joint ownership of streaming service, Hulu that contributed to the discussion between them about the disruptive forces changing the face of the media industry. The future seemed uncertain to both of them for their respective empires. Murdoch was also surprised by the way digital companies like Facebook and Amazon bid to gain global broadcasting rights for the Indian Premier League for the coming five years earlier this year. While Star India did gain the rights eventually, it came with a hefty price tag of 16,000 crores. Other reasons include declining revenue from pay television (TV) as consumers, especially in mature markets like the US are relying on streaming service providers for such content.
Disneys future
The acquisition can be seen as a major step by Disney, among others, to revamp its entire business strategy and content portfolio. It announced earlier that it will not be renewing the contract with Netflix to distribute Disney content until after its expiration in 2019. It plans to launch its own Over The Top (OTT) platform to make available all its content directly to consumers, instead of distribution through platforms like Netflix. Disney has a lot to gain, along with taking on certain liabilities which can be turned into productive assets if the right strategy is applied.
The movie and TV content under the Fox banner will bring a huge variety in the existing library of Disney, with titles like This is Us, Modern Family, the Marvel movies like Deadpool, X-Men among others. Consolidation of this content comes at a time when players like Netflix and Amazon have been producing some marvellous original content like ‘Narcos’ and ‘Stranger Things’, which have gained worldwide popularity.
Media landscape
Content platforms like Netflix had enjoyed an era of Blue Ocean, with no other player operating in this segment. The media industry has witnessed such a rapid transformation in the recent years that it has given legacy media houses a huge hit. The trick now is either to go big or go small or go out. There is no middle path left to pursue. With the completion of this deal, Murdoch will own five percent stake in Disney. There is a possibility of Ruperts son, James Murdoch heading Disney after Iger completes his tenure. Iger will stay on board until 2021 to oversee the transition.
In words of Rupert Murdoch, they are pivoting at a pivotal moment. Only time will tell how this merger will shape the media industry in growing economies and the constantly changing digital landscape.
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