The Walt Disney Co. (DIS) has reportedly held talks with 21st Century Fox (FOXA), that would result in DIS acquiring the FOXA movie studio, TV production studio, several television networks (FX, National Geographic), their international TV services (Sky, Star) and 30% of Hulu. For our purposes, it is what will not be included that is most noteworthy; Fox’s Sports Programming. There is a belief that combining those assets with ESPN could be construed as anti-competitive and lead to anti-trust violations. For those same reasons, DIS will not be purchasing the Fox Broadcast Network, Fox News or Fox Business Channel. Negotiations are currently on hold, though certainly not dead.
Howie Long-Short: 21st Century Fox doesn’t believe it has enough desirable content to compete in the OTT entertainment streaming space, so the company will strip down to just news and sports programming; content that still draws live viewers (and advertisers). As for DIS, adding the 20th Century Fox catalog, as they prepare to launch a new DTC service, must be considered a boon. FOXA shares are up more than 10% since the story broke on Monday (DIS is up nearly 3%). The company will report fiscal Q1 earnings later today. DIS will report fiscal Q4 earnings tomorrow.
Fan Marino: I find Fox’s NFL coverage, from the studio talent to the graphics, to be unwatchable; so, it’s disappointing to hear ESPN won’t be taking over production of Fox’s sports properties. Perhaps in another lifetime we’ll get a Gus Johnson/Bill Walton college basketball broadcast.
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