Twentieth Century Fox Film Corporation, often called simply 20th Century Fox, is an American film production company that is located in southern California. The studio was involved in the development of the original Star Wars trilogy and subsequently distributed the prequel trilogy. Located in the Century City area of Los Angeles, just west of Beverly Hills, the studio is currently a subsidiary of The Walt Disney Company.
20th Century Fox was actually not George Lucas's first choice for a distributor of the film, having been preceded at least by Universal Studios, who turned his offer down. Lucas convinced Fox, or more specifically Alan Ladd, Jr., to finance Star Wars, due primarily to Ralph McQuarrie's artwork. In 1977, the company's risky investment paid off when Star Wars became an enormous hit. Fox's stock skyrocketed, and despite the sale of Star Wars merchandising and sequel rights to Lucas, the company still made strong profits.
Current ownership rightsEdit
Even after the release of Fox's final Star Wars film, Fox continues to earn profits from the franchise due to DVD sales and distribution revenue.
Despite the The Walt Disney Company's 2012 purchase of Lucasfilm Ltd. and the release rights to all future Star Wars films, Fox was to retain original distribution rights to Star Wars: Episode IV A New Hope, which they co-produced and co-financed, in perpetuity in all media worldwide. Fox was also to retain theatrical, nontheatrical, and home video rights worldwide for the franchise's five subsequent films, which Lucasfilm produced and financed independently, through May 2020, at which time ownership was to transfer to Disney. This complex relationship between Disney and Fox, particularly in regards to Fox's perpetual rights to Episode IV, was to create an obstacle for any future boxed set comprising all nine films.
Purchase of copyrights by DisneyEdit
Early acquisition negotiationsEdit
On December 14, 2017, the Walt Disney Company announced that it is acquiring most of Fox's parent company, 21st Century Fox, including the film studio and all distribution rights to A New Hope, for $52.4 billion. On May 7, 2018, shares of Fox rose 5.1% when a report was released that Comcast was in talks with investment banks and firms in order to obtain bridge-financing for an all-cash bid, reportedly worth $60 billion, that threatened the Disney-Fox deal.
On May 29, it was reported that Disney was looking into making its own all-cash counteroffer for Fox assets in the event that Comcast went through with their offer. The next day, Disney and Fox announced that they have set their shareholder vote meetings for July 10, though both companies have stated that Fox's meeting could be postponed if Comcast came through with their offer. On June 12, AT&T was given approval by District Judge Richard J. Leon to acquire Time Warner, easing concerns Comcast had regarding whether government regulators would block their bid for Fox. Consequently, the next day, Comcast mounted a bid of $65 billion for the 21st Century Fox assets that were set to be acquired by Disney.
On June 18, it was reported that Disney will add to its already existing $52 billion claim to contest Comcast's proposed counteroffer for the Fox assets. On June 20, Disney and Fox announced that they had amended their previous merger agreement, upping Disney’s offer to $71.3 billion (a 10% premium over Comcast's $65 billion offer), while also offering shareholders the option of receiving cash instead of stock.
On June 21, Murdoch said in response to Disney's higher offer: "We are extremely proud of the businesses we have built at 21st Century Fox, and firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace at a dynamic time for our industry." That still does not prevent other companies from making a bid, as the deal needed to be voted on by shareholders. Iger explained the reasoning behind the bid: "Direct-to-consumer distribution has actually become an even more compelling proposition in the six months since we announced the deal. There has just been not only a tremendous amount of development in that space, but clearly the consumer is voting—loudly."
On June 27, the United States Department of Justice gave antitrust approval to Disney under the condition of selling Fox's 22 regional sports channels, to which the company has agreed. On July 9, a Fox shareholder filed a lawsuit to stop the acquisition from Disney citing the absence of financial projections for Hulu. On the same day, CNBC reported that Comcast was looking for companies that could take over Fox's Regional Sports Networks. This would make easier Comcast's legislative problems regarding the takeover of Fox assets, preparing to make a new all cash counter-offer before July 27, 2018.
On July 12, the Department of Justice (DOJ) filed a notice of appeal with the D.C. Circuit to reverse the District Court's approval for AT&T's acquisition of Time Warner (now WarnerMedia). Although analysts say that the chances of a DOJ win are small, they say it is the "final nail in the coffin for Comcast's Fox chase. This is a clear gift to Disney." On the next day, CEO of AT&T Randall Stephenson gave an interview with CNBC, about Comcast's bid for Fox: "It probably can't help it. You're in a situation where two entities are bidding for an asset, and this kind of action can obviously influence the outcome of those actions."
Approving the acquisitionEdit
On July 13, Disney received the support of the Institutional Shareholder Services and Glass Lewis, the two most prominent proxy adviser firms in the world. Fox shareholders were recommended by the advisers as means to provide for Disney's future. On July 16, CNBC reported that Comcast is unlikely to continue its bidding war to acquire Fox from Disney in favor of Sky. On July 19, Comcast officially announced that it was dropping its bid on the Fox assets in order to focus on their bid for Sky. The CEO of Comcast, Brian L. Roberts, said "I'd like to congratulate Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company." On July 25, TCI Fund Management, the second largest shareholder of 21st Century Fox, voted to approve the Fox-Disney deal. On July 27, Disney and Fox shareholders approved Disney's purchase of Fox's entertainment assets. The acquisition's completions should be in the first half of 2019. On the same day, Bloomberg News reported that out of all 15 nations yet to approve the deal, China could become the biggest threat to the merger since the trade war with the USA resulted in the merger between Qualcomm and NXP not being realized. On August 9, it was reported that Viacom CEO Robert Bakish wants to license its TV ad targeting tech to the entire industry, starting with Fox.
Further regulatory processes and structuringEdit
On August 12, the Competition Commission of India approved the Disney-Fox deal. On September 17, the European Commission announced plans of deciding what to do with the Disney-Fox deal by October 19. On October 5, Disney announced the commencement of exchange offers and consent solicitations for 21st Century Fox.
On October 8, Disney announced that 21st Century Fox's top television executives would join the company, including Peter Rice, Gary Knell, John Landgraf, and Dana Walden. Rice will serve as Chairman of Walt Disney Television and co-chair of Disney Media Networks, succeeding Ben Sherwood while Walden is to be named Chairman of Disney Television Studios and ABC Entertainment. On October 10, it was reported that the new, post-merger organizational structure of "New Fox" would be implemented by January 1, 2019, ahead of the closure of the Disney sale (which is still expected to occur during the first half of 2019). On October 15, Disney offered a list of concessions to the European Commission, which extended the review deadline to November 6. On October 18, Disney announced a new organizational structure for The Walt Disney Studios.
On November 6, the sale was cleared by the European Commission, pursuant to the divestment of certain factual television networks in Europe owned by the Disney/Hearst joint venture A&E Networks, including Blaze, Crime & Investigation, History, H2, and Lifetime. Disney will continue to be a 50 percent owner of A&E in areas outside of the European Economic Area. On November 19, Chinese regulators approved the Disney-Fox deal, without any conditions, with regulatory approval from several countries still remaining. After obtaining approval from Chinese regulators, Disney reported that it still needed to obtain regulatory approval from several other regulators, though the approvals from the United States, European Union, and China were considered the most important hurdles to clear.
On November 21, Disney expected to get approval from Brazil's antitrust division, the Administrative Council for Economic Defense (CADE), within two weeks. On December 3, CADE stated that the deal would concentrate the market of cable sports channels. CADE recommended remedial measures, and has until March 23, 2019 to issue a decision; the deadline may be extended for 90 days. On December 13, Disney announced a new organizational structure for its international operations and the individuals who would join the company, including Rebecca Campbell, Jan Koeoppen, Diego Lerner and Uday Shankar. Shankar who currently serves as Chairman and President Fox Networks Group Asia and Star India will lead Disney's Asian operations and will become the new Chairman of Disney India.
By December 14, the merger was subjected to regulation in Mexico, where Disney/Fox would account for 27.8% of content distribution across all genres. Sports broadcasting was Mexico's main concern. On December 26, NBC News reported that the deal is expected to close on the last week of January 2019. On January 3, 2019, Bloomberg reported that Brazil's Administrative Council for Economic Defense (CADE) is expected to approve the media-asset deal without pressing for any property sales. CADE is expecting to see a proposal from the two companies that includes behavioral changes after some back-and-forth meetings in December. Concerns centered on the sports impact from the combination of ESPN and Fox Sports. According to the report, CADE is aware that other services compete in sports broadcasting. A ruling could come as soon as January 30, when regulators come back from year-end recess.
On January 7, 21st Century Fox filed a registration statement with the U.S. Securities and Exchange Commission to create Fox Corporation, the company to be spun off in connection with the Walt Disney Company's acquisition of most of its film and television assets. Fox Corporation will include the company's branded news, sports and entertainment assets: 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.
On January 11, Fox Corporation said in a securities filing that it has no plans to bid on the Fox regional sports networks that Disney is selling to get approval for the assets to be acquired from 21st Century Fox. The deal between Disney and Fox is expected to close between February and March. However, on January 30, in a SEC filing by Disney, it was reported that the deal is expected to close by June. On January 31, Mexico's Federal Commission of Economic Competition (COFECE) approved the Disney-Fox deal after Disney agreed to sell its stake in Walt Disney Studios Sony Pictures Releasing de México, a Mexican film distributor, to Sony Pictures Motion Picture Group. On February 5, during Disney's Q1 2019 earnings call, Bob Iger confirmed that Disney was still waiting on approval from the "last few remaining markets" for Disney-Fox. On February 12, Bob Iger met with Brazil's antitrust regulator CADE to discuss the Disney-Fox deal. However, a decision on the deal still could not be reached. CADE had until March 17 to make a decision. Regulators were split on whether the deal could be approved without the need for Disney to sell either Fox Sports or ESPN. However, on February 20, Bloomberg confirmed that CADE would make its ruling on the Disney-Fox deal on February 27, 2019.
On February 21, Bloomberg reported that Disney would divest Fox Sports in Brazil and Mexico to get approval in these countries. The two countries were among the last major hurdles for the Disney-Fox deal. On February 27, Brazil's antitrust agency CADE approved the merger with conditions requiring Disney to divest Fox Sports Brazil among other measures. The regulator said that they coordinated with regulators in Mexico and Chile in evaluating the transaction. Brazil's approval cleared one of the final hurdles, allowing the deal to be completed as early as March. It was also announced that Disney was pursuing AT&T's 10% share of Hulu, which when combined with Disney's 30% and Fox's 30%, would give Disney a 70% ownership of the service.
On March 4, The Walt Disney Company tweaked Robert Iger’s compensation package he would receive upon closing the Disney-Fox deal, removing $13.5 million in potential salary and incentive awards available for the chief executive after the company closes its acquisition of 21st Century Fox Inc. assets. On March 5, Disney announced that Craig Hunegs would lead the combined TV operations at Disney Television Studios once the Disney-Fox deal closes. Hunegs will be president of the division, with oversight of all operations, including ABC Studios, ABC Signature, 20th Century Fox Television and Fox 21 TV studios. He'll report to Dana Walden, currently chairman/CEO of Fox Television Group who will be chairman of Disney Television Studios and ABC Entertainment.
On March 7, Bob Iger stated at an annual meeting that the Disney–Fox deal would be ready to close "soon," and that following the acquisition, 20th Century Fox would keep its name alongside Fox Searchlight, and the FX Networks. On March 11, Mexico's telecom regulator, Federal Telecommunications Institute (IFT), approved the deal under the condition that Disney and Fox agree to sell Fox Sports in the country. They also had to keep the National Geographic brand separate from its A&E channels. This cleared the last major holdout on the deal.
On March 12, Disney announced that it had set to close the Fox deal on March 20, 2019. On March 19, Fox Corporation officially became a standalone, publicly traded company, separate from 21st Century Fox, making Fox Corporation the owner of the assets that were not acquired by Disney. The announcement also included appointment of the board of directors. Also on March 19, 2019, 21st Century Fox officially completed distribution of shares ahead of the completion of the Disney deal on March 20. On March 20, the deal was officially completed.
On March 21, it was reported that Disney would shut down the Fox 2000 Pictures studio on October 4, 2019, following the release of The Woman in the Window. On the same day it was reported that up to 4,000 people could lose their jobs as Disney commenced layoffs following the merger.
On April 3, Debmar-Mercury, the television syndication arm of Lionsgate, announced that it will end its national ad sales partnership with 20th Television, and they will transfer their national ad sales for their first-run and off-network shows by the company to CBS Television Distribution Media Sales. However, Tyler Perry's Meet the Browns will continue to be handled by Disney for ad sales even after CTD takes over the national ad sales for the company's shows.
- The Secrets of Star Wars: Shadows of the Empire
- Empire Building: The Remarkable Real Life Story of Star Wars
Notes and referencesEdit
- Twentieth Century Fox on Wikipedia
- Acquisition of 21st Century Fox by Disney on Wikipedia
- 20th Century Fox official site