Bob Iger, left, CEO and chairman of the Walt Disney Company, before ringing the opening bell at the New York Stock Exchange on Nov. 27. (Drew Angerer/Getty Images).
Although rumored for some time, yesterday it was officially announced that The Walt Disney Company will acquire 21st Century Fox for an astounding $52.4 billion in one of the biggest deals the entertainment industry has seen. The all-stock transaction will include Twentieth Century Fox movie and TV studios, most of its cable networks and international assets. Not included in the deal are the Fox network and Fox News.
What does this mean for the consumer? It’s likely, analysts say, that the impact will be very big over time.
The deal values the 21st Century Fox assets in the transaction at $66.1 billion, including $13.7 billion in Fox debt ($28 a share). The enterprise value of the deal is $69 billion. Disney expects to see $2 billion in cost savings from combining Disney and Fox’s overlapping businesses within two years of the deal’s closing. Disney expects the regulatory review of the acquisition to be approved and to close within 12 to 18 months.
“The consumer will likely not benefit from such a deal,” says eMarketer’s principal analyst for video, Paul Verna. “This acquisition is about the Murdoch family cashing out and Disney trying to future-proof its empire. There is no benefit to consumers that I can envision. If anything, the alliance will result in fewer choices and higher prices, since it will consolidate ownership of important content and distribution properties under one roof. This is especially true given yesterday’s repeal of net neutrality.”

Disney's chairman and CEO, Robert Iger, who will stay on in his role through 2021 to oversee the integration of the assets, maintains that this will ultimately benefit the consumer.
“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” he said in a statement. “We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings.”
The deal, he adds, will substantially expand Disney’s international reach, allowing the company to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.
“The bottom line is that consumers care about cost, convenience and quality,” explains Paul Dergarabedian, senior media analyst at comScore. “If the deal enables people to have an even greater array of entertainment options for a lower cost, that's a good thing. However, a byproduct of consolidation is that it can often create a fragmented marketplace with audiences scrambling to figure out which streaming service or platform best serves their needs.”
One thing that actively frustrates consumers is red tape, says Amobee principal brand analyst Jonathan Cohen. “Disney acquiring Fox is going to make a lot of it disappear. For years fans have wanted to see the X-Men interacting with Spider-Man and the Avengers in the movies, and now it can happen. Anastasia might have been a Fox Animation Studios film, but to the audience she felt like a Disney princess; with the acquisition she will be.”  
Meanwhile, at an advertiser level, brands should be able to target fans of these genres at an even greater scale, Cohen explains. “For instance, if an advertiser approaches Disney about wanting to target superhero fans, a buy around Agents of S.H.I.E.L.D. on ABC could be up-sold to include purchasing ad time around Legion on FX and Runaways on Hulu, a platform Disney will now own a majority of. Being able to better monetize genre content could also benefit consumers, as the more revenue it generates, the more likely similar shows will be green-lit."
The effects of the deal spilled over into social media. Cohen did a little digging and found out that since the acquisition was announced yesterday, Twitter was buzzing with activity surrounding the deal. According to Amobee, there was 59% more digital content engagement around Marvel versus Capcom yesterday compared to the day before. Recent editions of the video game franchise have lacked X-Men characters, and now that Disney and Marvel fully own the X-Men I.P. again, fans are hoping that Marvel will again be willing to showcase those characters in new video games.
Regarding the news that the X-Men and Fantastic Four movie franchises will now revert back to Marvel and Disney, there were 32,000 tweets mentioning the X-Men and 14,900 tweets mentioning the Fantastic Four. Twitter sentiment around those X-Men tweets were 69% positive, 29% neutral and 2% negative. Twitter sentiment around those Fantastic Four tweets was 98% positive, 1% neutral and 1% negative.
Around the assumption that the Fox character Anastasia would finally become a Disney princess, there were 4,900 tweets mentioning Anastasia, with sentiment around those tweets being 56% positive, 34% neutral and 10% negative. Around Iger's giving fans a public assurance that there can still be 'R' rated Deadpool movies at Disney, there were 29,000 tweets around Deadpool, with sentiment around those tweets being 44% positive, 53% neutral and 3% negative.
While Disney will continue with family-friendly content such as Frozen, it will now also be able to deliver Fox's edgier content from the likes of FX and National Geographic. The deal also gives Disney a majority control of Hulu: Fox and Disney each have a 30% stake so under the new deal Disney will have a 60% ownership, while Comcast/NBCUniversal owns 30% and Time Warner 10%. Also included is a 50% share of Endemol Shine Group, the Star India satellite service and Fox’s 39% interest in European satellite broadcaster Sky (Fox will continue to pursue its acquisition of the remaining 61% stake with the intention of Disney taking it over when the transaction is completed).
As Disney pulls its massive library of blockbuster hits, including Star Wars, out of Netflix, the company will gain leverage by amassing more premium content under one roof. X-Men and Fantastic Four franchises will be returned to Marvel, as will almost all of Marvel’s movie properties.
A main focus is Disney’s upcoming direct-to-consumer streaming service expected in 2019. Iger said in an interview on Good Morning America that Disney isn’t expecting to reach the scale of Netflix quickly, but certainly aims over time to be an able competitor. More importantly, he said, is that the company believes the way of the future is to be able to reach consumers directly. The OTT business is a very competitive one with Netflix planning to put $8 billion into original content next year and Amazon $4.5 billion.
This, says Verna, is where the trickle-down effect takes place. “When consumers make decisions about the entertainment services they subscribe to, they think primarily about price and channel availability. In the digital realm, they also increasingly consider things like device access, simultaneous streams and picture quality. I don’t see a way in which the Disney-Fox combination will help with any of those points. When you layer in the loss of net neutrality, you also have the risk that sprawling, integrated companies such as Disney-Fox (and Comcast/NBC Universal, for that matter) will prioritize their own content on their networks, thereby further depriving consumers of choice. Netflix recently increased its prices to offset its massive content expenditures. I don’t see that trend moving in the opposite direction in the foreseeable future, either for Netflix or for any of the entertainment conglomerates, including Disney-Fox.”
“It will be incumbent upon all players in the streaming space to carefully delineate why their service offers the best content at the best price to avoid customer confusion and frustration,” says Dergarabedian. “Of course, the combined horsepower of Disney along with the Fox-based assets will be a powerful draw for consumers both on the small screen and the big screen.”