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Deal of the Year: Fox-Disney merger and what it means for India

15-December-2017
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Deal of the Year: Fox-Disney merger and what it means for India

Finally, putting all rumours to rest the two media giants The Walt Disney Co. and 21st Century Fox announced the blockbuster deal of 2017.  The two companies announced that they have entered into a definitive agreement for Disney to acquire 21st Century Fox. The deal will include the Twentieth Century Fox Film and Television studios, along with cable and international TV businesses, for approximately $52.4 billion in stock (subject to adjustment). 

But what exactly does this deal mean for India? In India, Star has a strong presence in GECs and sports whereas Disney dominates the kids' space. An industry expert believes that this $52.4 billion deal will complement the two companies and will fill each other's backlog. Star India will now become part of Disney APAC division. 

Immediately prior to the acquisition, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2 and Big Ten Network into a new "Fox" company.

“Star’s India division will become a part of Disney APAC, not the global division. In fact, that is why the elevation of Uday Shankar (Star India CEO and Chairman who is now elevated as President for Asia region at 21CF) happened. The deal will complement each other. Star India never had a presence in the kids' space and Disney in the GEC space. And don’t forget the sports component. ESPN has exited India and it had made its comeback in India in association with Sony Pictures Network. But if Star gets acquired, it gives them a formidable power in the sports genre. Particularly with the recent judgement by the Supreme Court which involves compulsory sharing of provisional signals, so it gives renewed figures to ESPN’s efforts to monetise in India market. So this will fill up what theother party doesn't have,” an industry insider said. 

Building on Disney’s commitment to deliver the highest quality branded entertainment, the acquisition of these complementary assets would allow Disney to create more appealing content, build more direct relationships with consumers around the world and deliver a more compelling entertainment experience to consumers wherever and however they choose. 

Raman Kalra, Partner, PwC India - Entertainment, Media & Sports Sector Advisory Leader, thinks the merger will make it a formidable force in India bringing together two genres. He said, “We need to see this more holistically where the combined entity gets much better placed largely to take on the threats from native digital players. It will drive more compelling content experience for the viewers. There will be tremendous synergies and efficiencies which will benefit the two companies. Irrespective of their current sizes in Indian market they do complement each other quite well with Disney’s dominance in kids genre and ability to monetise the IPs enabled businesses and Star’s dominance in GECs. Together, they make a strong dominant player in the marketnot to forget the strong sports properties that come along with Star. Sports and general entertainment will suddenly add a lot of value from the Indian market point of view. Having said that, with such strong synergies what would be most crucial is how the two entities handle the merger. All in all, this is a very good move with two complementary genres coming together to make one entity in India. It will be interesting to see how things turn out.” 

Combining with Disney are 21st Century Fox’s critically acclaimed film production businesses, including Twentieth Century Fox, Fox Searchlight Pictures and Fox 2000, its storied television creative units, Twentieth Century Fox Television, FX Productions and Fox21. Disney will also acquire FX Networks, National Geographic Partners, Fox Sports Regional Networks, Fox Networks Group International, Star India and Fox’s interests in Hulu, Sky plc, Tata Sky and Endemol Shine Group. 

For 21st Century Fox, the only presence in India is Star and their bouquet of GECs and sports channels. “It will take minimum one year to complete this deal and for it to start affecting everything in India. Full-fledged changes will take that much time,” said a broadcaster who chose to remain anonymous. 

A senior media planner said, “It's one of the biggest deals in media and has reduced competition on one side but it has also made Disney larger and this is an epic moment for the future of M&E as with this, streaming of content will be controlled by Disney largely and will pave a new path for all. India will feel the effects of this with time to come and the Disney pie will grow even faster.”

(With inputs from Madhuwanti Saha)

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