One of the biggest entertainment industry acquisitions since The Walt Disney Company bought Lucasfilm is now officially in the works: Disney has agreed to buy the bulk of 21st Century Fox's movie and television assets for a whopping $52.4 billion, according to the New York Times.
The deal was " target="_blank" rel="noopener">first rumored back in November, and the details were officially announced December 14. Although the acquisition still needs to be ratified by the Department of Justice, if it goes through as announced it will move a wide array of Fox movie and television properties under the Disney banner, with the exception of a few major elements: Fox News, Fox Sports, and the Fox broadcast network. The deal will also give Disney majority shareholder status with streaming video service Hulu -- an important component of the deal, given Disney's interest in creating its own streaming services to serve up properties like Marvel films, Star Wars films, and multiple others directly to your living room.
One of the largest consolidations of entertainment content and distribution in recent memory, the deal has understandably generated quite a bit of speculation regarding what it could mean for the future of both Disney and Fox properties, as well as the future of the entire streaming video distribution model.
Fox has had tremendous success in recent years with its X-Men films franchise based on Marvel Comics characters such as Wolverine and Deadpool (less so with the Fantastic Four superhero team), and with Marvel Studios already under the Disney banner, the deal could bring audiences one step closer to a fully unified Marvel Cinematic Universe.
Disney has already set plans in motion to remove its Marvel, Lucasfilm, and Pixar projects by 2019 from streaming titan Netflix as it prepares to launch its own streaming service that will host these and other sci-fi, superhero, and animated content. The gritty Marvel television series set in the MCU Disney partnered with Netflix to produce -- including Daredevil, Jessica Jones, and Luke Cage -- will likely remain on the latter service until that agreement expires. Their home after that point, however, remains unclear.
The deal also could bring the X-Men and Fantastic Four franchises into the MCU proper, but a full-fledged reboot of any and all former Fox properties will likely be necessary to integrate them into the already established live-action Marvel continuity -- similar to what was done with Spider-Man in last year's Captain America: Civil War and in this year's Spider-Man: Homecoming. While the idea of a fully integrated live-action cinematic universe might sound like music to Marvel fans' ears, Disney's affinity for catering to an all-ages audience with its superhero projects might not align with the recent, edgy evolution that was so successful for "R"-rated X-Men spinoff movies Deadpool and Logan.
Currently, 21st Century Fox has X-Force and New Mutants films in the works based on the Marvel Comics properties of the same name, as well as an "R"-rated Deadpool sequel. In his latest tweet, the always vocal Deadpool franchise star Ryan Reynolds weighed in on the news shortly after the deal was announced, layering on plenty of Deadpool snark.
While the unified Marvel Cinematic Universe is the crown jewel when it comes to 21st Century Fox-owned properties, there are plenty of other interesting franchises in play apart from superhero fare. Fox is also the home of the Alien and Avatar franchises, as well as the Planet of the Apes series. The deal would give Disney ownership of franchises which account for six of the 10 highest-grossing movies worldwide, and seven of the 10 highest-grossing movies domestically.
The deal also puts the entirety of the Star Wars universe under one banner. The Star Wars prequel trilogy (Episode I-III) is under the 21st Century Fox banner, and should the deal clear all the hurdles it will undoubtedly face, Disney would finally own the entire cinematic franchise.
The fount of franchises under Disney's belt are just one small facet of the deal. It could also potentially mean a complete shift in the world of streaming as we currently know it, with a litany of intriguing implications.
Ahead of this latest news, Disney previously announced plans for the launch of at least two separate streaming services: One for its sports network, ESPN, and another delivering its content like Marvel Movies, Star Wars films, and even a Star Wars television show. But that's just the tip of the streaming iceberg. Currently, streaming service Hulu is co-owned by Disney, 21st Century Fox, and Comcast, each holding an equal stake, with another 10 percent owned by Time Warner. Should the deal go through, Disney would hold a majority stake in Hulu, and Disney CEO Bob Iger clarified how the company envisions its planned streaming empire in the wake of the deal going public.
As reported by Deadline, Iger laid out some intriguing plans for the service.
“Owning a third of [Hulu] was great but having control will allow us to greatly accelerate Hulu into that space and become an even greater competitor to those already out there. We’ll be able to do that not only by putting more content in Hulu’s direction but by essentially having control to the extent that managing Hulu becomes a little bit more clear, efficient and effective,” he said.
He then added some subtle braggadocio in reference to the film and TV property powerhouse that is (and/or will be) Disney.
“We do know that if we decide to increase our original spending on Hulu, we certainly have the intellectual property-creating possibilities far more than we did before this acquisition,” he said, later adding, "We believe creating a direct to consumer relationship is vital to the future of our media businesses and is our priority.”
It would appear Iger sees Hulu as the service for the more adult-oriented programming and content -- both movies and television -- that come from the Fox deal, while Disney's streaming service will deliver the more family-oriented content that encompasses its Lucasfilm, Marvel, Disney, and Pixar projects. Meanwhile, though Fox Sports will stay in the hands of Rupert Murdoch and Co., Disney's ESPN-based sports streaming service will be supplemented by Fox local and regional sports channels, which will reportedly be part of the deal.
The acquisition of a controlling stake in Hulu appears to be as much of a deciding factor in the deal as the Fox movie and television properties, as Disney is clearly keen on controlling its own fate in the streaming video marketplace.
Iger indicated that Disney's stake in Hulu will help it "become an even more viable competitor" to the likes of Amazon and, especially, Netflix, which has been carving out an increasingly large place for itself in the world of direct-to-consumer original video content; with the help of its worldwide rollout, Netflix has acquired over 100 million subscribers globally. Both Netflix and Amazon have also won Primetime Emmy Awards for their original series in recent years, and their shift toward original content and away from licensed programming has proven to be a wise move, given how many networks and studios -- including CBS, HBO, and others -- have invested in their own streaming services in recent years.
Given the surprising popularity of Netflix's content, and Amazon Video's mixture of critically acclaimed series and a near-unlimited flow of cash, the Disney deal doesn't appear to threaten either streaming service in the immediate future. Whether the deal will ensure Disney's future as a dominant force in the direct-to-consumer streaming video marketplace remains uncertain, however, and opinions are mixed.
"What we don't understand is why Disney would want to compete with Netflix, and other new media players, as a new media content aggregator," wrote Wall Street analyst Doug Creutz in a note to clients Thursday (via CNBC). "With even more players entering the fray (Apple, Google), and a likely willingness by at least some of them to play a long game of loss leadership in content aggregation to support other business objectives, we expect pressure on content margins."
If there's one thing the Disney deal seems to indicate loudly and clearly, it's that the days of one or two streaming services providing a massive selection of movies and television produced by a wide array of studios and networks are well on their way to being over. Welcome to the brave new streaming world.
Update: This piece has been updated to include new details of the deal, its effects on the world of streaming, and other implications.