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Home / Business / Disney shareholders have decided to buy these assets from Fox. What now?

Disney shareholders have decided to buy these assets from Fox. What now?



An earlier headline in this article falsely states that the Walt Disney Co Board of Directors has approved a takeover of 21st Century Fox Inc.'s assets. Instead, the shareholders approved the purchase on Friday. The error has been corrected.



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After a controversial bidding war with Comcast for Fox's Entertainment Assets. The Disney and Fox shareholders approved a $ 71
billion deal that would make Disney the new owner of some of Fox's most valuable entertainment assets.

Walt Disney shareholders and 21st Century Fox Inc. approved a $ 71.3 billion deal on Friday, bringing some of Fox's most coveted entertainment assets into Mouse House's already impressive content arsenal will bring.

The approval came after months of uncertainty, with Comcast Corp.

CMCSA, + 0.95%

who made an unsolicited $ 65 million bid in June, forced Disney

DIS, -0.78%

increase its initial stock offering from $ 52.4 billion to $ 71 billion in cash and stock. Last week, Comcast discontinued asset tracking and focused on offering to European pay-TV company Sky PLC

SKY, -0.13%

left Disney in the clear. With the deal, Disney will acquire the Twentieth Century Fox TV and Film studios, cable networks including FX and National Geographic Channel, Star India, a substantial stake in Sky PLC, and majority control of the Hulu streaming service.

But now that the big choice is out of the way, Disney still has some big items to address.

Fuchs

FOXA, -0.51%

currently owns 39% of Sky and has led a bidding war with Comcast for the remaining 61%. The final bid came earlier this month, when Comcast made an offer that rated Sky at $ 34 billion, 5% higher than Fox's last bid.

Disney will receive Fox's share of the European pay-TV giant in the sales contract, and companies will have to decide whether they want to buy the rest of Sky or have Comcast win.

Fox's current offer for Sky would add $ 19.5 billion to Disney's acquisition cost, BTIG analyst Rich Greenfield said in a statement earlier this month. Disney said any £ 1 increase in the Sky offering would add $ 1.5 billion in additional debt and $ 60 million in annual interest charges.

But the cost of what Disney CEO Robert Iger called a "true crown jewel" should not be a deterrent, some analysts say.

"While it is quite possible that Fox (and in turn Disney) will depart from Sky and will not surpass / surpass Comcast's offer, it's hard to believe," wrote Greenfield. "Why give up when the total cost difference is actually 1.1% for Disney?"

At the same time, some investors prefer to keep Disney away from Sky.

"There's a lot on the plate," said analyst Daniel Ives of GBH Insights. "From the perspective of an investor, integrating 21st Century Fox is central, and that's already a lot of work."

Part of this integration includes Hulu, which each owns 21% of 21st Century Fox, Walt Disney and Comcast. AT & T

T, + 2.41%

owns the remaining 10% through the recent acquisition of WarnerMedia, formerly Time Warner.

Read: Comcast revenues from broadband growth

More information: More than 5 million US consumers will cut the cable in 2018, Fox said in a 1965 poll

-Deal is complete, Disney will own 60% of the streaming service and thus receive majority control. The question will be how Disney will integrate this new asset with its own native streaming service scheduled to launch in 2019, Ives said.

There is also the possibility that Disney will seek to acquire Comcast's stake in Hulu, although Ives said it is likely that Disney will focus on the obvious goal of integrating its new assets.

"Now the hard work begins," he said.

"Successfully integrating these assets and building a content and streaming ecosystem that can compete with Netflix and Amazon over the coming years is the key to this acquisition," he said, adding, "That's what Shareholders focus. "

Fox's stake has risen 31.2% this year, while Disney's stake has increased 5.2%. The S & P 500

SPX, -0.66%

has gained 5.9% and the Dow Jones Industrial Average

DJIA, -0,30%

won 3,4%.


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