After a month of rumors, Disney is officially buying a big, big chunk of 21st Century Fox. But what are they buying? And are you going to notice any changes in how you watch TV or go to the movies? Let’s take a look.
- What is Disney buying? Essentially everything that isn’t Fox News, Fox Sports, or the Fox broadcast network. So they’re getting Fox’s movie studio, Fox’s TV production arm, the FX and National Geographic family of cable channels, some international TV channels, and Fox’s 30% stake in Hulu, making it a Disney company. In other words, if the deal goes through, Disney will own The Simpsons and The X-Files, in addition to its crucial control of the rights to Herman’s Head. And it’s not coming cheap, at $52 billion plus another $14 billion in debt.
- Will the deal go through? As it stands? Probably not. It’s likely regulators are going to force Disney to scale back at least some of its ambitions. Or the deal could be blocked altogether; AT&T and Time Warner are trying to merge, and running into regulatory trouble, after all. But it’s more likely Disney will be able to buy most of what’s on the table. Still, that’s all inside baseball. What’ll this mean at the movie theater or on TV?
- There won’t be as many movies at the multiplex and that might close your local theater: By far the biggest impact is that an already skimpy and sequel-packed movie release schedule is likely going to get even skimpier. Fox wasn’t exactly putting butts in seats before, and there’s little reason to assume Disney is going to fund a full slate of Fox films. That’s a massive problem for movie theaters, which desperately need you to show up and not just buy a ticket, but also a bucket of popcorn and a beer. Theatergoing is increasingly becoming a luxury people can only occasionally afford, and theaters need all the movies they can get.
- Fox, the network, will almost certainly lose the shows you love: Currently, most networks buy most of their shows from their parent company. This is more than Hollywood accounting; it’s how TV shows make money now, really. Without Fox’s television production arm, the Fox network’s entire financial structure essentially collapses. Back in November, Vulture took a look at the economics of the Fox broadcasting network, which already are not particularly great, and the future for even the network’s successful and beloved shows doesn’t seem to involve Fox:
Simply put, the big, high-quality scripted shows the network has long been known for — from decades-old The Simpsons to newer hits such as Empire — would no longer make much financial sense. Modern-day TV economics make it essential for linear networks, particularly broadcast ones, to fill their schedule with programs produced within the same vertically aligned company. That’s because the money generated by selling ad time on TV series is rarely enough these days to generate substantial profits; in some cases, advertising revenue doesn’t even cover the cost of making a show. So Fox shows such as Bob’s Burgers or Empire become super profitable only after they move to platforms beyond the network — like when reruns end up airing nightly on Adult Swim or streaming on Hulu.
Basically, Fox Broadcasting would become sports, news, reality TV, game shows, and talk shows, since those are cheaper to produce than scripted TV. This won’t happen the second the deal goes through, but shows will scramble to find a home.
- And it could all backfire. The entertainment industry is volatile in the extreme. In the late ’70s and early ’80s, Disney found itself flailing to catch up with pop culture tastes as the rise of blockbusters like Jaws and Star Wars caught it flatfooted. And it’s never been more volatile than it is now. TV audiences are fragmenting, streaming services are proliferating, movie tickets are spiraling up in price as attendance drops, and studios are increasingly torn between movies foreign audiences will turn out to see and movies American audiences will be interested in. Disney is placing a large, $60 billion bet that it’s in the right place to handle these changes. We’ll just have to see what happens, as this deal goes forward.