Disney and Fox: A Match Made in Heaven
By Ayal Shmilovich
Who is the undisputed king of Hollywood? Well, it depends who you ask. If you ask a Millennial, they will probably say Netflix because of their vast reach and library. If you ask someone a bit older, they may say Disney because of their long-standing track record and their immense franchises known the world over. According to BoxOfficeMojo.com, Disney has accounted for 33% of all movie ticket sales in 2018; however, Netflix has accumulated over 125 million subscribers worldwide at a breakneck pace, challenging the old-world model of the studio business. As overall theater revenue declines and people increasingly are “cutting the cord” of their cable provider, Disney’s revenue has been stagnating and needs to bring the fight back to Netflix. So, in late 2017, Disney made a formal bid to buy Twentieth Century Fox for $52 billion, giving Disney access to many properties that will beef up Disney’s reach and make it a formidable competitor to the juggernaut that is Netflix. In this article, you will see why I think Disney and Fox are a match made in heaven and how only together they can retake the crown from the onslaught of Netflix.
Marvel has been the juggernaut of all movie franchises since Disney has acquired it in 2009. According to Marvel Studios, ‘Avengers: Infinity War Part 1’ has pushed the total box office sales of Marvel movies to $16 billion. Still, the studio has not tapped its full potential. When Disney acquired Marvel, characters like the Deadpool, X-Men and Spiderman (and The Fantastic Four to a lesser extent) already had deals with Fox in place, so Disney was not able to capture the ticket sales of these successful franchises. The X-Men comics alone have over 95 characters according to Buzzfeed, which gives Disney a huge addition to the already successful ‘Avengers,’ ‘Defenders,’ and ‘Guardians of the Galaxy’ teams. The possibilities of individual movies, team movies, crossovers, etc. are mind-boggling.
In 2012, Disney acquired Lucasfilm, giving them access to the Star Wars franchise: a franchise second only to Marvel with about $10 billion in box office sales. Once again, Disney only got part of the pie as Fox holds the key to the first six films in the series. Again, the movie studio can license and create tons of new content based on these original series and include even more merchandising rights from it.
Titanic and Avatar
The two top grossing movies of all time are properties of Fox as well. For Titanic, the profits of that ship have mostly sailed (sorry, couldn’t resist the pun), while Avatar has one planned sequel for 2020 and several others scheduled for multiple years (according to James Cameron, the producer). With these additions, Disney will now own 11 of the top 15 box office titles of all time and all their rights.
Disney owns ESPN, which dubs itself the “worldwide leader in sports,” and many people in the United States believe that to be true. However, if you go outside the US, you realize that ESPN is present, but there are many other regional players that also have a major presence. In Europe, Sky Sports is one of those and Star Sports reigns in India. The Disney-Fox merger will also add both into the Disney portfolio, and would also add parts of Fox Sports’ regional coverage. Additionally, Disney launched its ESPN+ app this year, which allows subscribers more access to regional content that is not available to the nationally televised broadcasts. One can only assume that the future holds a full ESPN app that includes the broadcasts of all their properties, available to people all over the world: truly making Disney the worldwide leader in sports.
Disney’s true pièce de résistance will be how they combat Netflix on their direct-to-consumer streaming service, which Bob Iger spoke about on their first quarter 2018 earnings call, saying it will be available in late 2019, once their licensing deal with Netflix ends. Before the takeover was announced, Fox also said it would be pulling content from Netflix, pushing their own FX and Fox apps instead. Currently, Disney has Disney, Pixar, Marvel, Lucasfilm, Freeform TV, and a 1/3 state in Hulu as content generators. Iger also said on his conference call that they will be adding direct-to-consumer specific content with each of these franchises. With the acquisition of Fox, they will also inherit franchises like The Simpsons (TV’s longest-running scripted show) and Family Guy as well as the more serious shows from FX like Legion and The Americans. Disney will also inherit Fox’s stake in Hulu, giving them a controlling 67% of the streaming service with hit shows like The Handmaid’s Tale and The Mindy Project.
Disney and Fox will be a force to be reckoned with if the merger happens. Right now, Comcast (the parent company of NBC Universal) has made a bid for certain of Fox’s assets as well, throwing a wrench into Disney’s plan. However, I believe the merger of Disney-Fox will still play out and we will see a new era of Hollywood ushered in, with two major players on the stage. One thing Disney will surely have that Netflix won’t, is a major stream of content and licensing deals, not just for film and TV, but also for merchandise. Netflix does not own most of its content and Disney’s properties are the closest thing to immortality that exists in content creation. It was 90 years ago when Steamboat Willie was released and introduced the world to Mickey Mouse. That one character has done so much for the Disney name. Now, think of the possibilities, for the long run, that Disney has with all they have up their sleeve today.
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