Disney + Fox Deal Imminent

As Comcast drops out of the running, Disney in the driver’s seat in its bid to rebuild its empire & leverage Hulu to compete with Netflix

Disney Set to Acquire Fox Studio Assets

According to a Reuters report today, Comcast has removed itself from consideration for acquisition of 21st Century Fox assets. It would appear from all indications that the path is now clear for a deal that would put Disney in the driver’s seat and its expected that a deal could be announced as early as this week.

For Disney and its shareholders, the appeal of the deal is threefold:

  1. Increases Disney’s international footprint. With the US market at a mature position already, the int’l market is seen as a key growth opportunity
  2. Access to the Fox television and film studio content. Will fuel the Disney “direct to consumer” digital content strategy
  3. Gives them majority controlling interest in Hulu. Seen as key to compete with Netflix

The deal talk comes at a time when many of Disney’s long time moneymaker franchises, ESPN as a prime example, have seen their revenues continually decline in the wake of cord cutting.

In light of these realities, the deal makes a lot of sense, especially on the Disney side of the ledger, and in particular for gaining the controlling ownership of Hulu, which is seen as critical as Disney seeks to boost to its efforts to compete with Netflix. Disney’s acquisition of Fox’s share of Hulu would give Disney a 60% controlling ownership in the company.

As we have been chronicling on a regular basis , Hulu is in a pitched battle with DIRECTV NOW, Playstation Vue and others to capture the rapidly expanding market of cord cutters. In particular, Hulu has been aggressively moving to expand its nationwide rollout of local affiliate networks. It currently has over 440 local affiliates, besting nearest competitor DIRECTV NOW by a large margin.

Hulu’s SVOD service has also been rapidly expanding its catalogue of original content, seen as critical in its efforts to compete with Netflix, which currently is spending over 8 billion annually on original content and is the #1 OTT streaming service. Hulu trails Netflix and Amazon and sits at #3 on the list.

This is a developing story and we will continue to update it as it happens…