Rupert Murdoch has told Sky News the decision to sell the entertainment assets of 21st Century Fox to Disney will see Fox “returning to our roots” of news and sport.
The executive co-chairman of Fox spoke at length about the $52.4bn deal – seen as the biggest shake-up in Hollywood since the 1930s.
He told Ian King it was the right move at the right time though he was particularly sad to sell Sky – the owner of Sky News – assuming the takeover by Fox, which is continuing, is eventually given the go ahead.
The deal confirmed on Thursday will bring together the 20th Century Fox film studio behind hits such as Avatar, X-Men and Ice Age together with Disney’s film assets, which include Pixar, Marvel and the Star Wars maker LucasFilm.
The pair are respectively the fourth and second biggest movie studios in Hollywood and the deal means the ‘big six’ that have dominated Tinseltown for nearly a century will become a big five instead.
Image: Disney owns Star Wars maker LucasFilm
Included in the sale are Fox’s prized US cable networks, including FX and the National Geographic Channel, as well as international pay television assets including Star TV in India.
Fox has been trying to buy full control of Sky for the last year and the proposed £18.5bn takeover, which was launched just over a year ago, is currently being scrutinised by the Competition and Markets Authority.
Fox said it expected that deal to be completed by the end of June next year.
Disney would then eventually own the whole of Sky.
Other assets included in the deal are Fox’s 30% stake in Hulu, the US streaming service, in which Disney is also a shareholder.
The deal is expected to take a year to complete and will be subject to approval by competition regulators both in the United States and in the EU.
:: What the Fox/Disney deal aims to achieve
The latter is seen as less likely to have a problem with the takeover but the US, where the US Justice Department has been seeking to block the $85.4bn takeover of Time Warner by the telecoms giant AT&T, may be more difficult.
The combined business will make films that account for two in every five cinema tickets sold in the US – which may raise some concerns among regulators.
Under the terms of the deal, Disney will also take on some $13.7bn worth of debt from 21st Century Fox, making the total deal worth $66.1bn.
Announcing the deal, Bob Iger, the chairman and chief executive of Disney, said: “The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before.
Image: Bob Iger is both chief executive and chairman of Disney
“We’re honoured and grateful Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings.
“The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative platform distribution platforms to more consumers in key markets around the world.”
Mr Iger, who was due to step down as Disney boss in July 2019, will now continue in the role until the end of 2021.
Mr Murdoch described how the deal evolved following a discussion over a few glasses of wine with Mr Iger, who he described as a friend.
“He rang me back a couple of weeks later and said ‘look let’s (have) this conversation a bit more’.”
Under the terms of the transaction, which will be entirely in shares, investors in Fox will receive 0.2745 shares in Disney for each 21st Century Fox share they currently own.
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Shareholders in 21st Century Fox will own 25% of the enlarged Disney once the deal completes.
The remaining assets owned by 21st Century Fox include Fox News, America’s most-watched cable news channel; Fox Business, America’s most-watched business television channel; Fox Sports – which has the rights to broadcast the next football World Cup in the US – and a number of local television stations in the US.