Economy

Disney eyes 21st Century Fox assets

Disney eyes 21st Century Fox assets

Odey's comments come after CNBC said that Disney recently discussed buying Fox's movie and TV production studio studios, cable networks FX and National Geographic and worldwide assets such as the Star network in India and its stake in Sky.

Disney already owns broadcast TV network ABC, so it would not be allowed to buy Fox's broadcast network without breaching Federal Communications Commission rules. The WALL STREET JOURNAL's Fritz, Flint & Hagey in a front-page piece cite sources as saying that Fox "wasn't happy with the terms Disney proposed, but is open to the idea of selling the assets". The deal also would not include Fox's local broadcasting affiliates, CNBC reported. Disney can not own two broadcast networks, so it can not buy Fox.

21st Century Fox has been in talks with Disney over a potentially huge sale, according to insiders, as Fox shifts its focus to more narrow content categories. Fox Exec Chair Rupert Murdoch had spent the past several years "setting up his sons to take the helm". The fact that the Murdoch family empire, or at least parts of it, are for sale is a "big change".

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Reports say the companies have been negotiating off and on for the last few weeks, with no deal now on the table.

The biggest aspect here is the purchase of the film studio. Buying Fox's sports programming assets and combining them with ESPN will be perceived as anti-competitive from an antitrust standpoint. "For those that have the National Football League now, it is the most important piece of programming, so the risk would be the next set of negotiations should drive up prices, and if you're smaller, it's going to cost you a lot more on earnings than it would if you were bigger" ("Squawk Box", CNBC, 11/7). For Disney, a deal could bring additional programming it could use to lure audiences as the company tries to navigate consumers' rapid migration to digital viewing and compete with heavy spending by technology companies pushing further into Hollywood. Fox shares have been "swooning for much of the year". Fox declined to comment. Disney is preparing its own streaming service, which will house content from its many entertainment properties, including Pixar, Lucasfilm, and Marvel Entertainment. So, while there's no deal yet, we wouldn't be surprised if "The Simpsons" is proven right once again. With these stations-as well as Fox News-remaining with Fox, Disney and Fox's cable networks would complement each other well, offering few, if any, instances of direct competition.