Here are five reasons the deal is terrifying — and only one of them is increased media consolidation.
It’s official: Disney has acquired the film and television arms of 21st Century Fox for $52.4 billion.
Assuming regulators allow the deal to go through (it’s expected to take at least a year to close), Disney will own the rights to everything from the Avatar movies to FX’s The Americans. Fox, meanwhile, maintains the rights to Fox News, the Fox broadcast network, Fox Sports 1, and the gigantic Fox studio lot in Los Angeles. One of the six core studios that make up Hollywood has effectively been gobbled up by another, the biggest deal of its kind in decades (probably since the 1955 dissolution of RKO, since by the time MGM finally disappeared, it had been ailing for decades, unlike Fox). Variety marks it as the second-biggest merger ever after AOL-Time Warner.
Much casual interest in the sale has been driven by the fact that Disney will now own the film rights to the Marvel comics characters associated with the X-Men and Fantastic Four, which Marvel sold off to Fox long before either was a Disney subsidiary. (Marvel still doesn’t entirely own film rights to the Hulk — solo Hulk movies have to be produced with Universal, which is probably part of why there haven’t been any recently.) But Disney also now owns the rights to a bunch of other well-known cultural properties, including The Simpsons, the Alien franchise, and Alvin and the Chipmunks.
Considering that Disney has proved so capable at turning beloved cultural properties into blandly effective hit-producing machines, there are a handful of reasons to be at least cautiously anticipatory about what it might do with all of its new toys.
But for the most part, this deal is a little terrifying. There are myriad reasons, but here are five that are most distressing to me — and only one of them is the incredibly troubling march of further media consolidation!
One of the assets Disney couldn’t buy from Fox was its broadcast network of the same name, home to everything from The Simpsons to New Girl to The X-Files. The network launched in 1986 and was largely seen as a folly, but by the mid-’90s, it was a mainstay in most American homes, breaking the hegemony of the big three networks, ABC, CBS, and NBC.
Federal Communications Commission regulations state that no one company can own more than one broadcast network, and Disney already owns ABC. This would be fine if Rupert Murdoch and News Corp were simply going to keep running the Fox network as it’s been run until now. But in 2017, there are essentially only two ways to make money as a broadcast network: make it a home for programming already owned by the network’s sister studio (meaning ABC airs mostly programming made by ABC Studios or other Disney sister companies), or make it a home for ridiculously cheap programming (meaning reality shows and news). So it seems unlikely they’ll stay the course, even though early reporting suggests Fox TV will exist much as is for now (though scripted product is expected to decline).
Fox, in essence, can’t pursue option one. If the deal goes through, all of Fox Television’s other assets — including its studio and attached cable networks, of which FX is the most prominent — will belong to Disney. And while there are a few programs on the network that are money-printing machines and will thus continue for at least a little while ( The Simpsons and Family Guy chief among them), and a few other programs that it’s in Disney’s best interests to keep going (like the Marvel co-production The Gifted), there’s no reason for the Fox TV network to keep airing almost everything on its lineup if it won’t be collecting revenue from those shows via other means, like international sales or streaming sales. (Broadcast networks make almost all of their money from selling advertising space, a shrinking market in an era of ratings diminishment; essentially every other revenue stream is funneled toward the studios that produce TV shows.)
Now, there are ways that Fox could largely continue as-is. Disney could cut it a huge deal to carry many of those old Fox shows cheaply, figuring that they’re worth more to Disney as part of a huge streaming library and, thus, worth losing a lot of money on for a while. It’s also theoretically possible that Fox could sell off its TV network to another major studio that produces its own TV but doesn’t have a natural home for all of it (in essence, Sony or Warner Bros.). It could even become a glorified CW, should a studio like Sony team up with another player to share the cost of the network. (The CW is a joint venture between CBS and Warner Bros.)
But consider this: One of the key reasons to invest in the Fox network is that it holds NFL rights to broadcast NFC games, as well as the Super Bowl every third year. While NFL ratings have slipped, they’re still by far the biggest game in town, and if Fox really is refocusing on news and sports, letting NFL rights slip away wouldn’t make a lot of sense. And when you further consider that Fox has a longstanding relationship with (and share of) the reality TV producer Endemol Shine, it seems all the more likely that the network will continue to exist but mostly become a clearinghouse for reality programming, sports, and news content. This evolution, barring a sale to a different studio, seems inevitable. The network will still be Fox, but essentially a halfhearted version of itself.
One of the things keeping Hulu from truly taking on Netflix and Amazon for streaming network superiority has been its strange ownership situation, in which it is owned in part by Fox, Disney, NBCUniversal (an investor in Vox Media), and Warner Bros. When Fox sells its 30 percent share of Hulu to Disney in this deal, Disney will become the majority shareholder in Hulu. It remains to be seen if NBC will sell off its 30 percent stake, or Warner Bros. its 10 percent stake, but I think such a deal is likely.
Disney has been looking for a streaming platform with which it can strike back at Netflix. It made noise about creating its own platform, but just buying Hulu outright makes a certain sense. Hulu, after all, is already built and simply needs to go international. (Currently, Hulu is only available in the US.) And considering that Disney will now control the considerable TV library of Fox — as well as the smaller but still impressive Disney TV library — it will have a substantially advantageous position to turn Hulu into the Netflix competitor. (Disney is still said to be looking at building streaming platforms for sports programming, and then for its Marvel and Star Wars properties, but it’s also easy to imagine these proposed services becoming pricey Hulu add-ons.)
There are a handful of exciting things about this from the point of view of TV fans, like the idea of better integration between Hulu and FX, for instance. But one of the things that’s made Hulu work is its unstable ownership situation, which has essentially given the service access to almost all of the good TV, with packages that allow you to include even more TV networks to your Hulu bundle as add-ons. That’s led to a neither-fish-nor-fowl problem here and there for Hulu, but it’s also led to a massive library of TV shows, as well as the first drama series Emmy for a streaming service with The Handmaid’s Tale. It would be a shame to see that turned into another arm of the Disney monolith.
The real wild card in this deal is what happens to Rupert Murdoch. He and his family now own 5 percent of Disney and will hold seats on the company’s board of directors. But Murdoch, by most accounts, has always preferred the worlds of news and sports to the world of movies and scripted TV.
The important thing is this: Murdoch has long wanted to take Fox News international, previously via a furtive, aborted attempt to port the model to the UK. The jury’s out on whether he can actually accomplish this (the network may simply be too wedded to the US Republican Party in the eyes of overseas viewers), but it’s not as if socially conservative, jingoistic nationalism can’t gain a foothold in other countries. One hitch in this is that Fox sold off many of its international TV assets in the Disney deal. Yet if any media platform can figure out a way to make that work, Fox News seems as likely as anybody else.
Couple that with the Fox broadcast network’s need for cheap programming (which would likely include news programming) and Fox Sports 1’s inability to get out of the shadow of Disney-owned ESPN, and you have what amounts to a company that exists largely to keep the Fox News business humming along. (News Corp, of course, still owns a number of print publications, including the New York Post and the Wall Street Journal.
