With two of the 'big six' Hollywood studios set to unify, the likes of Warner Bros. and Universal will have their work cut out staying competitive.

By Joe McDonough

Posted on December 15, 2017

Walt Disney Co has confirmed it will purchase film, television and international businesses from Rupert Murdoch’s 21st Century Fox for $52.4 billion in stock. It will also assume $13.7 billion of debt.

Included in the deal is Mr Murdoch’s film and television studio 20th Century Fox.

And with two of the ‘big six’ Hollywood studios set to unify under the one umbrella, there will be immense pressure on Warner Bros., Sony, and Paramount to adapt in order to keep pace.

Business Insider even suggests the other mega studios may be forced into merging, which would give us “a movie version of the NBA’s super-team syndrome”.

The deal would see the X-Men re-join their fellow Marvel Studios characters, and the Deadpool and Avatar titles among others would also find a new home with Disney.

With Fox delivering R-rated superhero movies such as Deadpool (which amassed $700 million worldwide) and Logan, there are questions as to whether that will be continued on under the family-friendly Disney banner.

In the biggest indication yet, Disney CEO Bob Iver suggested there would be a place for edgier films in Disney’s future.

“[Deadpool] clearly has been and will be Marvel branded. But we think there might be an opportunity for a Marvel-R brand for something like Deadpool,” said Mr Iger. “As long as we let the audiences know what’s coming, we think we can manage that fine.”

Deadpool actor Ryan Reynolds was quick to make light of the situation, tweeting: “Time to uncork that explosive sexual tension between Deadpool and Mickey Mouse.”

Disney already owns Pixar, Marvel Entertainment and Lucasfilm, and Fox’s content will only bolster Disney’s arsenal as it prepares to apply the blowtorch to Netflix and Amazon in the digital streaming space.

It plans to launch its own subscription-streaming service in 2019.

“The core underlying driver for this deal… is the impending battle royale for content and streaming services vs. the Netflix machine,” Daniel Ives, head of technology research for GBH Insights, said in a recent report. The “appetite for content among media companies [is] reaching a feverish pitch.”

Aside from the film content, Fox brings family favourite TV shows such as The Simpsons and Family Guy, as well as 22 regional Fox Sports networks, which could help entice more sports fans to sign up to Disney’s proposed ESPN Plus streaming service (due for launch next year).

21st Century Fox also owns 39% of Sky, and Disney reportedly expects Fox CEO and Sky chairman James Murdoch to buy the remaining 61% of the broadcasting giant before the deal is officially rubber-stamped.

Of course, it still needs to be formally approved by industry regulators and shareholders before ink meets paper, and that is expected to take at least 12 months.

Mr Iver has agreed to stay on and lead Disney until 2021 to ensure a smooth transition.

“We’re honoured and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building,” Mr Iver said, adding that the deal would “significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings”.

In return, Mr Murdoch said: “I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”

This will be one of the greatest companies in the world.

Shareholders of 21st Century Fox will receive 0.2745 in new Disney shares for each 21st Century Fox share they hold. Combined they will own approximately 25% of the combined company.