Disney/FOX Acquisition Thread

[zg44]

Gotta be honest, after seeing Disney's Q3 report and diving into the details, it really does seem like the Fox merger was quite dilutive even though the overall rationale still makes complete sense. [I'd say the same if Comcast had acquired it.]

Price doesn't matter for a "unique" asset like this (especially given there was a bidding war), but the real value is Hulu, Star India, FX, National Geographic as well as their assets in South America, and then some of the tv/movie assets like X-Men/FF, Avatar, Simpsons and the other movie franchises that can be recycled.


But the price for that real value was very steep as the Disney earnings report showed. The Fox assets all told will likely produce somewhere around $20-22 billion in revenue this year but paying $85 billion in stock/cash/debt-assumed is a huge 4x revenue multiplier for media assets which are not anywhere near as valuable on a dollar-for-dollar basis as the remainder of Disney.

Traditional media assets typically carry a 1-2x multiplier, so it's extremely dilutive when you just consider the revenue aspect.

Obviously, Disney has overcome the dilution with their Disney+ announcement, and the Disney+/Hulu/ESPN+ bundle looks extremely attractively priced and so that's really where Disney can make up for any loss of value on the assets that they acquired.


Will definitely need to follow Fox's studio closely though, we could see Disney trim off most of it or have them seriously shrink down to a 10-12 movie slate where 50% of the movies end up on Disney+ or Hulu.

 

[quinnmac000]

Even more damaging article
Fox Faces Pressure at Disney After ‘Dark Phoenix,’ ‘Stuber’ Flops – Variety

 

[Mad Dog]

So glad Comcast quit bidding for that turkey company.

 

[GAcoaster]

So glad Comcast quit bidding for that turkey company.

After driving the price up that Disney ended up paying

 

[Nick]

So glad Comcast quit bidding for that turkey company.

Comcast at least wouldn’t be treating Fox film division like this. They’d let them still make adult skewed movies, which we won’t get under Disney ownership.

 

[Paulio]

So glad Comcast quit bidding for that turkey company.

No, Disney still has billions from Marvel, Star Wars, Pixar, Remakes, and WDA movies, as well as ABC and ESPN networks. Disney will recover eventually and continue to treat Fox as something entirelly different than it is under Warner Bros., Sony, Universal or Paramount. Now Disney's timeslot is nothing but incredible bloated. Imagine a couple of Fox Searchlight Pictures movies bombed, they might cut most of their movie developments off in favor of their already successful, cookie-cutter films.

 

[Nick]

No, Disney still has billions from Marvel, Star Wars, Pixar, Remakes, and WDA movies, as well as ABC and ESPN networks. Disney will recover eventually and continue to treat Fox as something entirelly different than it is under Warner Bros., Sony, Universal or Paramount. Now Disney's timeslot is nothing but incredible bloated. Imagine a couple of Fox Searchlight Pictures movies bombed, they might cut most of their movie developments off in favor of their already successful, cookie-cutter films.

The thing is most Fox Searchlight movies cost very little to make so it’s hard for them to actually “bomb”.

 

[Paulio]

The thing is most Fox Searchlight movies cost very little to make so it’s hard for them to actually “bomb”.

I know, I just offering a hypothetical scenario given the direction Disney is going with their Fox assets. They might cut some of the Fox Searchlight movies in favor of their already successful formula. As we're all expecting, Disney is extremely protective of its IPs and they're gonna chunk out more blockbuster movies and less emphaisis on award-winning and adult-themed contents as a result.

 

[Nick]

I know, I just offering a hypothetical scenario given the direction Disney is going with their Fox assets. They might cut some of the Fox Searchlight movies in favor of their already successful formula. As we're all expecting, Disney is extremely protective of its IPs and they're gonna chunk out more blockbuster movies and less emphaisis on award-winning and adult-themed contents as a result.

Disney has said that Fox Searchlight is going to run as is right now so hopefully they stick by that.

 

[Paulio]

Jojo Rabbit Will Alienate Disney Fans, Execs Reportedly Worry

As if things couldn't get any worse

 

[Nick]

Jojo Rabbit Will Alienate Disney Fans, Execs Reportedly Worry

As if things couldn't get any worse

Already being discussed in the Jojo Rabbit thread.

 

[zg44]

Fox Searchlight is under no threat imo. Even a relative "bomb" by them is just a rounding error (literally). They won't really be touched as a prestige label that makes several award contenders every year for very modest budgets. Those types of $1 million to $20 million budget range movies that are strong award contenders will always have long shelf lives on Hulu for streaming and typically many of them earn very strong theatrical returns for what is spent.


It's the main Fox studio that's really at risk here. Disney doesn't like to take risks on $50+ million budget movies unless there's some strong brand/franchise behind it.

That's why there's probably serious consideration for a dramatically shrunken version of Fox that just produces around 10-12 movies with a half of them going straight to Hulu or Disney+ and only the strongest movies (mainly franchise/brand movies) getting full theatrical releases.

 

[quinnmac000]

Fox Searchlight is under no threat imo. Even a relative "bomb" by them is just a rounding error (literally). They won't really be touched as a prestige label that makes several award contenders every year for very modest budgets. Those types of $1 million to $20 million budget range movies that are strong award contenders will always have long shelf lives on Hulu for streaming and typically many of them earn very strong returns for what is spent.


It's the main Fox studio that's really at risk here. Disney doesn't like to take risks on $50+ million budget movies unless there's some strong brand/franchise behind it.

That's why there's probably serious consideration for a dramatically shrunken version of Fox that just produces around 10-12 movies with a half of them going straight to Hulu or Disney+ and only the strongest getting full theatrical releases.

But JoJo Rabbit is a Fox Searchlight film and it has Disney apparently freaking out...so its not like Fox Searchlight is safe either

 

[zg44]

But JoJo Rabbit is a Fox Searchlight film and it has Disney apparently freaking out...so its not like Fox Searchlight is safe either

Fair point, ultimately Disney is going to have to decide whether they want to be in the adult movie business. It's a tough decision given they make the vast majority of their money targeting families as a family safe brand.

Most of Fox Searchlight won't fit into their brand. That's sort of the territory that prestige film making goes...

 

[Nick]

Fair point, ultimately Disney is going to have to decide whether they want to be in the adult movie business. It's a tough decision given they make the vast majority of their money targeting families as a family safe brand.

Most of Fox Searchlight won't fit into their brand. That's sort of the territory that prestige film making goes...

Adults watch their "family" movies too. And those adults also want more edgy, smart, and original movies mixed in with the homogonized Disney popcorn fare. I don't understand why it's so hard for Disney to realize that there's a market for edgy movies. Just because it's not going to be a billion dollar earner isn't a bad thing. Especially if it wins awards.

 

[Paulio]

Adults watch their "family" movies too. And those adults also want more edgy, smart, and original movies mixed in with the homogonized Disney popcorn fare. I don't understand why it's so hard for Disney to realize that there's a market for edgy movies. Just because it's not going to be a billion dollar earner isn't a bad thing. Especially if it wins awards.

Disney has changed throughout the last three decades. As much people like to bag on Michael Eisner for his decisions, at least he was creative in some of his projects.

Under Eisner, Disney had Miramax, Touchstone, Ghibli rights, and Hollywood Pictures, and the Alien Encounter ride at Disney World.

Under Bob Iger, they lost Ghibli, shuttered Hollywood, reduced Touchstone to nothing and sold off Miramax and Dimension Films in order to get back to solely producing family-friendly, cookie cutter movies under Pixar, Star Wars, and Marvel brands.

It's safe the say Disney isn't the same as it was three decades ago, as it reinforces its image as a company being known for movies all people (rather than those who are into edgier movies) would enjoy.

 

[zg44]

Adults watch their "family" movies too. And those adults also want more edgy, smart, and original movies mixed in with the homogonized Disney popcorn fare. I don't understand why it's so hard for Disney to realize that there's a market for edgy movies. Just because it's not going to be a billion dollar earner isn't a bad thing. Especially if it wins awards.

Yeah, I think there's just concern among Disney execs as to whether those movies will be seen as "Disney movies" even if they go from Fox Searchlight to Hulu without really touching any part of the traditional Disney structure simply because of the Disney ownership...

To me, that concern is trivial to a large extent. I don't think any parent will be taking their kids to Fox Searchlight films that are meant to be prestige films targeting serious issues, and/or that end up on Hulu.

I think having Fox Searchlight and Hulu as separate more adult oriented brands is actually a smart play. Yes, Hulu will also have some kids content as a comprehensive service, but I think most parents will understand that Disney+ is meant to be the "safe service" while Hulu has a lot more adult oriented content.


The problem is sort of just that Disney execs want to have their cake and eat it too on servicing all groups (including those that want non-traditional adult fare); the reality is that if you make any sort of fare that touches political topics that they might become controversial (as many prestige films become), but it's just a part of how the world works.

By using Fox Searchlight and Hulu for that sort of fare, they're insulating the Disney brand as much as possible. It's impossible to ask for more...

 

[MrBlonde]

Under Eisner, Disney had Miramax, Touchstone, Ghibli rights, and Hollywood Pictures, and the Alien Encounter ride at Disney World.

Under Bob Iger, they lost Ghibli, shuttered Hollywood, reduced Touchstone to nothing and sold off Miramax and Dimension Films in order to get back to solely producing family-friendly, cookie cutter movies under Pixar, Star Wars, and Marvel brands.

Under Eisner, he wanted to be everything to everybody.

Iger wanted to be the most profitable. He made concentrated bets and it paid off incredibly well.

I think with enough education to consumers to say Fox is for more mature fare while Disney, Pixar, etc. will be in the same wheelhouse people know.

If they don’t use Fox for expanding their reach across the spectrum of content, they paid way too much for The Simpsons.

They paid a premium to control those assets and now they need to monetize them better than Fox was capable of- otherwise what was the point?

 

[RFRees]

They paid a premium to control those assets and now they need to monetize them better than Fox was capable of- otherwise what was the point?

I'm not necessarily saying this is the reason but, monopolies will buy sometimes competition just to shut them down, thus increasing their own market share.

That being said, I don't believe Disney would spend this amount of money strictly for that reason. But it's probably at least on the list of reasons to buy Fox.

 

[Nick]

Yeah, I think there's just concern among Disney execs as to whether those movies will be seen as "Disney movies" even if they go from Fox Searchlight to Hulu without really touching any part of the traditional Disney structure simply because of the Disney ownership...

To me, that concern is trivial to a large extent. I don't think any parent will be taking their kids to Fox Searchlight films that are meant to be prestige films targeting serious issues, and/or that end up on Hulu.

I think having Fox Searchlight and Hulu as separate more adult oriented brands is actually a smart play. Yes, Hulu will also have some kids content as a comprehensive service, but I think most parents will understand that Disney+ is meant to be the "safe service" while Hulu has a lot more adult oriented content.


The problem is sort of just that Disney execs want to have their cake and eat it too on servicing all groups (including those that want non-traditional adult fare); the reality is that if you make any sort of fare that touches political topics that they might become controversial (as many prestige films become), but it's just a part of how the world works.

By using Fox Searchlight and Hulu for that sort of fare, they're insulating the Disney brand as much as possible. It's impossible to ask for more...

I will say, it could be a really smart play for Hulu membership to put Fox Searchlight movies on their service given the high quality nature. Could be the first streaming service with award winning movies.