Wall Street and other experts have lauded the strategic benefits for Disney, but also highlighted the cost of launching a streaming service later this year, which will be a drag on earnings.

The Walt Disney Co. has closed its $71.3 billion acquisition of large parts of 21st Century Fox, expanding its global reach and content portfolio ahead of the planned launch of its own video streaming service.

With the mega-deal, Disney, led by chairman and CEO Bob Iger, is adding the Fox film and TV studio, the FX networks, National Geographic, Indian TV giant Star India and Fox's 30 percent stake in streaming service Hulu to its portfolio. The additional Hulu portion takes Disney's stake in the streamer to 60 percent (with Comcast owning 30 percent, and AT&T's Warner Media 10 percent).

Using fiscal-year 2017 data, Disney said in a regulatory filing that the new assets could quickly add about $19.3 billion in annual revenue and $1.6 billion in net income. In that fiscal year, Disney reported $55.1 billion in revenue and $9.4 billion in net income.

Disney has promised $2 billion in cost savings from the Fox takeover, with some in the industry expecting between 4,000 and 10,000 layoffs.

After getting a green light for the deal from shareholders, the U.S. Department of Justice, European regulators and Chinese regulators, the globe-spanning deal recently received final approvals from Brazil and Mexico.

Disney must still sell 22 regional sports networks in the U.S. and its sports networks in Brazil and Mexico as part of regulatory approvals in those markets. In Europe, the company agreed to sell its stakes in such networks as Lifetime and History.

Disney had in December 2017 struck a deal with Fox, controlled by the Murdoch family, for $52.4 billion. Comcast in June 2018 unveiled a $65.0 billion offer for the Fox assets before Disney shot back with a sweetened $71.3 billion offer that led Comcast to end its pursuit.

The U.S. cable giant then focused on a showdown with Fox over ownership of European pay TV giant Sky. Fox had offered to boost its 39 percent stake in Sky to 100 percent, but Comcast trumped that bid, leading to a rare auction — which Comcast won with a $39 billion offer for Sky. That sale closed late last year after Fox, backed by Disney, agreed to sell its 39 percent stake, just like other shareholders who had also accepted Comcast's takeover offer.

Wall Street and other experts have said that the Fox deal has strategic benefits for Disney and will boost its content and global power, but that the changed asset mix it brings along with the cost of launching the Disney+ streaming service later this year will be a drag on earnings over the near term.

BTIG's Richard Greenfield in a recent note even argued that "Disney’s streaming creates a financial black hole in an earnings-per-share valued company."

Most on Wall Street are looking to an April 11 Disney investor day to get more insight into the Disney+ plans and how they will affect financials. "We don't expect to learn much specific on April 11 either," Bernstein analyst Todd Juenger said in a recent report. "Our best hope is for a) launch retail price of Disney+ in the U.S.; and b) some indication of magnitude of investment. Our stretch wish is some indication of cadence of international rollout."

He said he and other analysts will update their financials models for Disney based on management commentary on that day. "From that, we will all hone our (widely disparate) models of subs, revenue, earnings and free cash flow impact and associated valuation," Juenger said.

A recent study from research firm Ampere Analysis suggested that Comcast, after its acquisition of Sky, and Walt Disney, after its Fox deal, will dominate global content spending, putting some distance between themselves and Netflix. The two giants will spend $2 of every $10 spent on content worldwide, or 20 percent, and 37 percent in the U.S. Disney's content spending will amount to an 11 percent share worldwide and 23 percent in the U.S., while Comcast will account for 9 and 14 percent, respectively, according to Ampere.

Meanwhile, analysts have been bullish or neutral on the outlook for the new Fox Corporation, which, now that the sale has been completed, will focus on U.S. news and sports more so than entertainment programming. The new Fox, led by Lachlan Murdoch as CEO and chairman and Rupert Murdoch as co-chairman, includes the Fox broadcast network, TV stations, the Fox News group and the Fox Sports assets.

"The new Fox will begin as the only media company solely focused on the domestic market; focused on what Americans love best — sports, news and entertainment, built and delivered for a U.S. audience," Rupert Murdoch said last year.

Buckingham Research Group analyst Matthew Harrigan recently maintained his "buy" rating and raised his price target on the stock of Fox to $54 after previously lauding "generally good numbers for the businesses to be contributed to new Fox." He concluded that the new Fox's "earnings component appears healthy."

On Tuesday, Fox's first day of trading as the slimmed-down version of its former self, the stock closed at $49.69. Disney said late Tuesday that each share of 21st Century Fox will be exchanged for $51.57 or .4517 shares of TWDC Holdco 613 Corp., which, for now, is the holding company of Disney and Fox.</s>At 12:02 a.m. Eastern Time tomorrow, March 20, 2019, The Walt Disney Company's acquisition of 21st Century Fox will become effective. With 21st Century Fox's iconic collection of businesses and franchises, Disney will be able to provide more appealing high-quality content and entertainment options to meet growing consumer demand; increase its international footprint; and expand its direct-to-consumer offerings, which include ESPN+ for sports fans, the highly-anticipated Disney+ streaming video-on-demand service launching in late 2019; and Disney and 21st Century Fox's combined ownership stake in Hulu.

'This is an extraordinary and historic moment for us-one that will create significant long-term value for our company and our shareholders,' said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. 'Combining Disney's and 21st Century Fox's wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era.'

The acquisition includes 21st Century Fox's renowned film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures, Fox 2000 Pictures, Fox Family and Fox Animation; Fox's television creative units, Twentieth Century Fox Television, FX Productions and Fox21; FX Networks; National Geographic Partners; Fox Networks Group International; Star India; and Fox's interests in Hulu, Tata Sky and Endemol Shine Group. Disney and 21st Century Fox entered into a consent decree with the U.S. Department of Justice last year under which Disney will divest 21st Century Fox's Regional Sports Networks.

Earlier today, 21st Century Fox completed the spin-off of a portfolio of 21st Century Fox's news, sports and broadcast businesses, including the FOX News Channel, FOX Business Network, FOX Broadcasting Company, FOX Sports, FOX Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network, and certain other assets and liabilities, into Fox Corporation.

Click here to read a press release detailing Disney's acquisition of 21st Century Fox.</s>Nearly two years after Disney’s multi-billion dollar deal to acquire key entertainment assets from 21st Century Fox was announced, the Disney-Fox acquisition has been completed to the tune of $71.3 billion. The acquisition wil become effective at 12:02 a.m. Eastern Time March 20, 2019.

21st Century Fox announced that the long-standing deal for the Walt Disney Company to acquire its key assets, including the 20th Century Fox film and TV studio, Fox’s entertainment cable networks, and its international assets, has been completed. Read 21st Century Fox’s statement below:

Twenty-First Century Fox, Inc. (“21CF”) (NASDAQ: TFCFA, TFCF) announced that it has today completed the distribution of all issued and outstanding shares of Fox Corporation (“FOX”) common stock to 21CF stockholders (other than holders of the shares held by subsidiaries of 21CF) on a pro rata basis (the “Distribution”). 21CF and FOX are now each a standalone, publicly traded company. FOX Class A common stock and FOX Class B common stock are now listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbols “FOXA” and “FOX,” respectively. 21CF Class A common stock and 21CF Class B common stock, which were formerly listed on Nasdaq under the symbols “FOXA” and “FOX,” respectively, are now listed on Nasdaq under the symbols “TFCFA” and “TFCF,” respectively.

Shareholders from Disney and Fox approved the deal back in July 2018, but the finalization awaited major share approval for the deal from regulators in Mexico. Now with the long-standing deal finally closed, Fox has officially joined Pixar, Marvel, and Lucasfilm under Disney’s umbrella of studios.

The Disney-Fox deal is one of the biggest Hollywood deals in history. Disney initially put up $52.4 billion for Fox’s assets in December 2017 and received the approval of the Justice Department despite concerns that the deal would be in violation of antitrust laws, but faced a few other bumps in the long road to finalization. The price was driven all the way up to a massive $71.3 billion after Comcast approached Fox with a higher offer. Comcast ended up bowing out of the Fox bidding, leaving a clear (albeit more expensive) path for Disney to swoop in.

The Disney-Fox acquisition has received notable attention from the pop culture world thanks to the impending incorporation of the X-Men and the Fantastic Four into the Marvel Cinematic Universe. However, those elements often overshadow the human costs of the deal, which will almost certainly result in at least 4,000 employees losing their jobs. Once the deal becomes effective at 12:02 a.m. Eastern Time tonight, we’ll likely see more news roll in about the effects of this deal.</s>Disney has completed its historic takeover of 21st Century Fox, creating an entertainment behemoth of unprecedented scale.

Disney has completed its historic takeover of 21st Century Fox, creating an entertainment behemoth of unprecedented scale.

The Walt Disney Company closed its 71.3 billion US Dollar (£53.7 billion) acquisition at 12.02am Eastern Time on Wednesday, expanding its media portfolio ahead of the launch of its streaming service later this year.

The mega-deal sees Disney absorbing the Fox film and TV studios, the FX networks, National Geographic and Indian TV giant Star India.

Some of Fox’s other properties, including its news and sports businesses, have been spun off into the newly formed Fox Corporation.

Disney also doubled their 30% stake in streaming service Hulu, making it by far the biggest stakeholder.

Disney plans to launch its rival to Netflix later this year.

Before the takeover, it already boasted a fearsome catalogue of content, including its classic cartoons, Star Wars and many of the Marvel characters.

After purchasing Fox, it will be able to add the likes of X-Men and Deadpool to its portfolio.

In a statement, Robert Iger, chairman and chief executive officer of The Walt Disney Company, hailed the move.

He said: “This is an extraordinary and historic moment for us – one that will create significant long-term value for our company and our shareholders.

“Combining Disney’s and 21st Century Fox’s wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era.”

The move instantly cut the number of major Hollywood studios, ending the era of the Big Six. Warner Bros, Universal, Sony Pictures and Paramount Pictures now make up the Big Five with Disney.

And it cast major doubt over the jobs of potentially thousands of workers, with experts predicting as many as 4,000 positions could be cut.

Rupert Murdoch, the billionaire former owner of executive co-chairman of 21st Century Fox, wrote a letter to employees two days before the takeover was finalised, thanking them for their work.</s>March 20 (UPI) -- The Walt Disney Co. on Wednesday officially completed its $71.3 billion purchase of a large chunk of 21st Century Fox as it prepares to roll out a long-awaited new streaming service.

The deal gives Disney Fox's film and television studio, the FX networks, National Geographic and Star India, along with Fox's 30 percent share in Hulu for overall ownership of 60 percent.

Disney said some $2 billion in savings could be realized by the acquisition, but some industry experts expect layoffs to be part of the impact -- with as many as 10,000 jobs lost.

"This is an extraordinary and historic moment for us -- one that will create significant long-term value for our company and our shareholders," Disney CEO Robert A. Iger said in a statement Wednesday.

In an agreement with the Justice Department last year, 21st Century Fox had to spin off its regional sports networks so the deal could go through.

What's left -- Fox News Channel, Fox Business Network, Fox Broadcasting Company, Fox Sports, Fox Television Stations Group, sports channels FS1, FS2, Fox Deportes and the Big Ten Network -- will remain in the hands of owner Rupert Murdoch.

Murdoch sent a note to 21st Century staff Monday saying the deal is a win-win.

"I anticipate tremendous opportunity for our businesses," Murdoch wrote. "Fox will be a force in the U.S. market with powerful brands."

Some analysts argue, though, the deal could force smaller studios to merge just to compete. The deal also gives Disney greater leverage over theater owners when it comes to box office splits and can use its might to stunt the growth of upstart Netflix.</s>(Reuters) - Walt Disney Co closed its $71 billion acquisition of Twenty-First Century Fox Inc's film and television assets on Wednesday, giving its upcoming streaming service a range of popular content as it takes on Netflix Inc.

The deal will expand Disney's portfolio of some of the world's most popular characters, uniting Mickey Mouse, Luke Skywalker and Marvel superheroes with Fox's X-Men, "Avatar" and "The Simpsons" franchises.

The streaming service, Disney+, aims to make up for the continuing loss of subscribers from ESPN and other cable networks.

The completion of the Fox deal comes nearly a year after Disney won a bidding war against cable company Comcast Corp for the assets.

Separately, Fox Corp debuted on the Nasdaq on Tuesday and named former U.S. House Speaker Paul Ryan, Formula One Group Chief Executive Officer Chase Carey and two others to its board.

The newly spun-off media company, which will house assets including Fox News Channel and Fox Broadcast Network, is expected to bring in around $10 billion in annual revenue.

(This story drops incorrect reference to two board members stepping down).</s>21st Century Fox says it has completed the distribution of shares to birth the Fox Corporation.

"21CF and FOX are now each a standalone, publicly traded company," 21st Century Fox said in a statement issued at 8.30am local time on Tuesday.

The separation of new and old Fox begins a new era for the Murdoch clan and the media business, a day before Disney completes its acquisition of 21st Century Fox.

The new-model Fox will begin trading on Tuesday on the Nasdaq under the FOXA symbol.

Earlier on Tuesday, 21st Century Fox finalised the complex transfer of the Fox Corp assets - primarily Fox News, Fox Sports, and Fox Broadcasting - to the newly created Fox Corporation.

Fox Corp. will also fork over $US8.5 billion ($A12.0 billion) in cash to 21st Century Fox prior to the separation to help Disney offset the tax bill for the transaction.

For Tuesday only, both Fox Corp and 21st Century Fox shares will trade on the Nasdaq, with the latter switching to the TFCFA ticker symbol until Disney scoops up the outstanding shares.

By 12.02am on Wednesday, Disney is expected to complete its acquisition of the remaining 21st Century Fox assets, buying out 21st Century Fox shareholders with a mix of cash and stock.

Fox Corp is expected to keep a low profile on day one, other than the announcement of members of its board of directors.

Rupert Mudoch and Lachlan Murdoch remain controlling shareholders on the board.

On Thursday, Lachlan Murdoch will hold a town hall session for employees. The company is expected to face some growing pains early on as it downsizes its workforce as the assets change hands and Fox Corp is re-engineered to focus on TV, live events, news and sports.

Fox Corp will be extremely reliant on the Fox News cable channel for the bulk of its earnings.

Wall Street analyst Michael Nathanson estimates that some 86 per cent of Fox's earnings will come from cable programming, and 90 per cent of those earnings will come from Fox News.

Fox Corp is projected to have earnings before interest, taxes, depreciation, and amortisation of $US385 million in its fiscal 2019, growing to $US680 million by 2021.

Fox Corp will have a strong balance sheet but it will be a much smaller company than before.

In Wall Street terms, the stock will move out of the mega-cap S&P 100 index to the S&P 500.

The biggest changes are expected on the entertainment side, now that Fox Broadcasting will be a free agent when it comes to buying programming.

"We think the company, absent a tethered TV studio to pump up, will become much more aggressive on managing their scripted entertainment content costs," Nathanson wrote.

Even so, many Wall Streeters expect Fox to bulk up anew.

While Lachlan Murdoch is set to run the company, no one thinks his father, Rupert Murdoch, is going to sit on the sidelines.

"I don't think Murdoch sees himself in any way as out of the game,' says Jeffrey Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management.

The elder Murdoch is "very engaged with the media world. He has always had newsprint under his fingernails. I think he will continue to burnish his efforts there."</s>NEW YORK — Fox Corp., the Fox assets that are not part of Disney's $71.3 billion acquisition of Fox's entertainment assets, began trading as a stand-alone company on Tuesday ahead of Disney's final acquisition of Fox movie assets.

The New York company also appointed several people to its board of directors, including former Speaker of the House Paul Ryan and Chase Carey, a former executive Twenty-First Century Fox.

Disney's acquisition is set to close around 12 a.m. EDT on Wednesday, more than a year after the mega deal was first proposed in December 2017.

Fox Corp. consists mainly of Fox Broadcasting, Fox Sports and Fox News. Disney is acquiring the Fox movie business, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000 as well as Twentieth Century Fox Television, FX Productions and Fox21, with shows including "The Simpsons" and "Modern Family."

Fans have speculated about the deal's possibility to bring together the X-Men characters and Disney's Marvel Cinematic Universe, which includes the Avengers.</s>A huge entertainment behemoth of unprecedented scale has been created after Disney completed its historic takeover of 21st Century Fox.

The 71.3billion US Dollar (£53.7bn) mega-deal sees Disney absorbing the Fox film and TV studios, the FX networks, National Geographic and Indian TV giant Star India.

Disney also doubled their 30% stake in streaming service Hulu, making it by far the biggest stakeholder, as it prepares to launch its rival to Netflix later this year.

Some of Fox's other properties, including its news and sports businesses, have been spun off into the newly formed Fox Corporation.

Before the takeover, it already boasted a fearsome catalogue of content, including its classic cartoons, Star Wars and many of the Marvel characters.

After purchasing Fox, it will be able to add the likes of X-Men and Deadpool to its portfolio which already includes the MCU and Star Wars.

In a statement, Robert Iger, chairman and chief executive officer of The Walt Disney Company, hailed the move.

He said: "This is an extraordinary and historic moment for us - one that will create significant long-term value for our company and our shareholders.

"Combining Disney's and 21st Century Fox's wealth of creative content and proven talent creates the preeminent global entertainment company, well positioned to lead in an incredibly dynamic and transformative era."

The move instantly cut the number of major Hollywood studios, ending the era of the Big Six. Warner Bros, Universal, Sony Pictures and Paramount Pictures now make up the Big Five with Disney.

And it cast major doubt over the jobs of potentially thousands of workers, with experts predicting as many as 4,000 positions could be cut.

Rupert Murdoch, the billionaire former owner of executive co-chairman of 21st Century Fox, wrote a letter to employees two days before the takeover was finalised, thanking them for their work.</s>Homer Simpson probably won't become the newest member of the Avengers, but anything's possible now that Disney owns 21st Century Fox.

One year after Disney announced the $71.3 billion merger, it's finally official. The deal, which closed Wednesday at 12:02 a.m. eastern time, reshapes the media landscape and makes Disney an even greater entertainment behemoth. In bolstering its trove of characters and stories, the acquisition also puts Disney in a stronger position to take on Netflix and other streaming companies, when it launches its own service, Disney+, later this year.

Disney, which already owns the Pixar, Marvel and the Star Wars brands, will now also get Deadpool and the Fox-owned Marvel characters such as the X-Men and Fantastic Four, allowing for the full Marvel family to be united. Disney also now owns former Fox television networks such as FX Networks and National Geographic Partners. Disney will also get Fox's 30 percent ownership of Hulu, giving Disney a controlling share of 60 percent.

Now that Fox Corp. has sold off most of its entertainment properties, it has become a standalone company that will retain ownership of its broadcast network, owned-and-operated network affiliates, the Fox News Channel, Fox Business Network and Fox Sports.

Former House speaker Paul Ryan is joining the board of directors of the new Fox Corp. NPR's David Folkfenflik told WBUR's "Here and Now" that Fox's decision to retain Ryan "is in keeping with the way in which Rupert Murdoch and his family has operated over the years, where they have acquired, essentially, a lot of major political heavyweights to be on their corporate boards, occasionally as top executives — essentially as a hedge" against the fairly heavy regulations that media companies sometimes face.

The deal has been in the works for more than a year, but wasn't official until various regulatory agencies around the world gave their approvals. After months of flirting with the idea, Disney and Fox announced in Dec. 2017 that they had agreed to a $52.4 billion deal that would sell off most of Rupert Murdoch's entertainment properties. As Folkenflik reported at the time, the acquisition offered a chance for Disney to "consolidate holdings, bringing together talented leaders in television and movie production, major cable properties and a vast network of local sports cable channels to fold into Disney's ESPN programming."

The deal hit a snag in 2018 when Comcast unexpectedly bid $65 billion to lure Fox away from Disney. But Disney was able to keep the deal moving forward when it upped its offer to $71 billion. The Justice Department OK'd the acquisition last summer as long as Disney, which owns ESPN, agreed to sell off 22 regional sports networks that were originally part of the purchase.

For Fox, the decision to sell many of its entertainment properties was motivated mostly by "fear, opportunity pragmatism," Folkenflik explained: "Fear of the seemingly bottomless wallets of Netflix, Amazon and possibly Apple to spend on new shows; opportunity to cash out assets at a possible peak; and pragmatism in finally resolving the professional fates of Murdoch's sons, Lachlan and James, as well the fortunes of four other Murdoch children who do not play a role in the company."

The acquisition could have negative consequences. NPR TV Critic Eric Deggans told NPR's Morning Edition that thousands of people will likely lose their jobs as Disney consolidates its properties.

Note: Both Walt Disney Pictures and Twentieth Century Fox have funded NPR.
The Walt Disney Company completes its $71.3 billion acquisition of 21st Century Fox's film and TV assets (with the exception of the business, broadcasting network, news, and sports assets owned by the newly-formed Fox Corporation).