The entertainment world lit up today with a seemingly strange bit of business gossip: Disney, arguably the most powerful movie studio on the planet right now, was considering buying most of 21st Century Fox. The talks are described as on-again, off-again (and now apparently off), but the logic detailed hints that Fox is willing to sell to somebody. But would that deal even make sense?
The basics of Fox’s logic are fairly straightforward corporate stuff. Fox thinks that it can’t beat Disney, or merge its way into a better place on the market in movies and TV, so it makes fiscal sense to sell off the film and TV division. This would include not just the Fox movie studio and its subsidiaries, but also Fox’s television production unit, which is behind everything from The Simpsons to American Crime Story. It wouldn’t include, for legal reasons, Fox’s broadcast operations or Fox’s cable channels. Fox wants to focus on areas it thinks it can dominate and that opens the door to all sorts of suitors, not just Disney. Forget the X-Men returning to the Marvel Cinematic Universe. Imagine The Simpsons being an Apple Music exclusive.
Just looking at dollars and sense, it looks like it works on paper. Fox, as a movie studio, is struggling to deliver Disney-like results, and while the TV side is doing better, with hits like This Is Us on broadcast and FX’s prestigious lineup on cable, TV production is just getting messier with more streaming services and more competition.
But on the flip side, look at the businesses Fox wants to keep. Fox News may rake in $1.5 billion in profit a year, for now, but half its viewership is older than 68, and younger viewers, when not outright contemptuous of the network, prefer streaming and mobile sources for news. Fox Sports just barely got clear of an ugly sexual harassment scandal, which was the cherry on top of an ugly year behind the scenes and 2018 promises not to be much better in an industry, sports broadcasting, facing some fairly grim questions about where it fits in modern TV watching. As for Fox, the broadcast network, despite supporting great shows like The Last Man On Earth and a sturdy Sunday night sitcom block, it’s stuck in fourth.
Fox has the misfortune of most other old-school media companies, which is how we watch, and what we watch, is changing rapidly and giant companies simply aren’t nimble enough to be a step ahead. Instead of competing with other movie studios and other channels, it’s now competing with Netflix, Amazon, Apple, and a host of others. Audiences formerly hostage to a schedule and a coaxial cable are increasingly just streaming everything. That problem doesn’t vanish just because you’re no longer putting movies in theaters.
To some degree, shedding some of itself and focusing on trying to stay ahead in a handful of industries makes sense for Fox. It could fetch billions from the sale and use that money to shore up its remaining businesses. But that won’t solve Fox’s larger problems. The money will only help if Fox, and its brethren, face the reality that, simply, they need to change how they approach their entire business. Otherwise, Fox is just snapping the Titanic in half, and hoping the end they picked floats a bit longer.