Finance

Iger: Fox Will Help Accelerate Direct-to-Consumer Plans

Says content buy also serves as hedge in case MVPD model falters 12/14/2017 8:54 AM Eastern
Disney CEO Bob Iger

The Walt Disney Co. chairman and CEO Bob Iger said the company's $52.4 billion purchase ($66.1 billion including debt) of key 21st Century Fox assets will allow the company to accelerate its plans to offer direct-to-consumer content in the future, protecting the company should its current distribution model falter.

Disney agreed to purchase Fox’s 20th Century Fox movie and TV studios, cable channels FX, FXX and National Geographic, regional sports networks, Big Ten Network and other properties in a deal they expect will close in 12 to 18 months.

Related: Disney Pulls Fox Trigger

On a conference call with analysts to discuss the deal, Iger said that while the current Disney model to is to provide content to its distribution partners, having more content in the arsenal – as well as 60% control of online distributor Hulu – gives the company more security in the changing media landscape.

Iger said if its turns out that MVPDs aren’t as viable as they once were, the deal allows Disney to “flip a switch” and provide content directly to the consumer.

“This basically fills in the blanks for us,” Iger said on the call, giving Disney the production capabilities and creative capabilities to bring out content directly to the consumer with lesser risk. As for obtaining a greater interest in Hulu – Disney had been a 30% owner – Iger said control enables Disney to “greatly accelerate Hulu into that space,” not only by providing more content.

“Managing Hulu become more clear, more efficient with a controlling shareholder rather than with equal partners,” Iger said.

Related: Murdoch: Disney Deal a ‘Momentous Occasion’

Iger was also optimistic that the deal would pass regulatory muster, even in the wake of the Dept. of Justice’s plans to block AT&T’s purchase of Time Warner Inc. One point of possible contention: the regional sports networks included in the deal, since access to sports content was one of the issues in the AT&T-Time Warner merger review that led to Justice filing suit to block the deal. 

Iger said that while he knows a deal of this size and scope will attract a significant amount of regulatory scrutiny, he believes if the authorities look at the deal from a consumer point of view, they should quickly conclude that the aim of the deal is to create more high quality product delivered in more innovative and compelling ways.

The Disney chief, who agreed to stay on as chairman and CEO through calendar 2021, said the combined company will also provide opportunities for Fox management talent to thrive and grow within the Disney fold. That also includes 21st Century Fox CEO James Murdoch, who according to reports had been considered as a possible success to Iger.

On the call Iger said Murdoch will be an integral part of the integration process of the two companies and that after that they will continue to have conversations as to whether there is a role for Murdoch in the combined company.

 

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