Disney (DIS - Free Report) recently announced new organizational structure for its Media Networks Business, as it proceeds to wrap up the 21st Century Fox (FOXA - Free Report) acquisition. The company is set to appoint a number of Fox executives to key leadership roles upon completion of the acquisition.
Peter Rice, currently President of 21st Century Fox, and Chairman and CEO of Fox Networks Group, will become the Chairman of Walt Disney Television and Co-Chair Disney Media Networks. He will directly report to Robert A. Iger, Chairman and CEO of Disney.
Moreover, Dana Walden, currently Chairman and CEO of Fox Television Group, will be appointed as the Chairman of Disney Television Studios and ABC Entertainment.
Dana Walden will report to Rice and so will a host of other executives, including John Landgraf (Chairman of FX Networks and FX Productions), Gary E. Knell (Chairman of National Geographic Partners), Gary Marsh (President and Chief Creative Officer, Disney Channels Worldwide) and James Goldston (President, ABC News).
A Look at Transaction’s Timeline
The acquisition, announced in December 2017, saw a lot of drama after cable-giant Comcast (CMCSA - Free Report) entered the scene with a better offer that forced Disney to raise its initial price.
Disney’s amended offer of $38 per share in cash and stock valued the acquisition at $71.3 billion. This was alluring than the initial offer of $66.1 billion, as well as $6.3 billion higher than Comcast’s all-cash offer.
Including Fox’s net debt of $13.8 billion, the total transaction value under the amended terms were $85.1 billion. Notably, Fox’s recent decision to sell the 39% stake in Sky to Comcast for almost $15 billion, which Disney agreed to, is expected to bring down the debt levels significantly.
In end-June, Disney secured approval from the Antitrust Division of the United States Department of Justice (DOJ). Notably, prior to the completion of the acquisition, 21st Century Fox will disintegrate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a newly-listed entity that will be spun off to its shareholders.
Fox Acquisition: Key Catalyst for Disney
Disney’s planned acquisition of majority of 21st Century Fox’s assets will significantly expand its content portfolio. The company will have telecasting rights of Major League Baseball (MLB) and NBA in the United States, Premier League, Serie A, Bundesliga and UEFA Champions League in the Europe and also Indian Premier League (IPL).
Disney’s international footprint will increase substantially by the addition of the aforementioned sports channels. Moreover, Fox Networks International operates above 350 channels in 170 countries, while Star India has 69 channels serving 720 viewers per month.
Further, movie content portfolio will expand significantly with the addition of popular titles like Avatar, X-Men, Fantastic Four and Deadpool.
Acquisition to Boost Competitive Prowess
The acquisition is expected to boost Disney’s competitive position against the likes of Netflix (NFLX - Free Report) and Amazon Prime, who are disrupting the media space based on whopping budgets.
Netflix expects to spend close to $8 billion on original content in 2018, while Amazon is reportedly spending $5 billion. Apple (AAPL - Free Report) is also expected to launch its own streaming service in early 2019. This will further intensify competition.
Disney is also expected to launch its streaming service in late 2019. The streaming service is said to feature content from Pixar, Marvel, Lucasfilm and National Geographic. Additionally, Disney is working on building its original content portfolio for its streaming service.
Currently, Disney has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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