Scrooge McDuck Mr. Burns

Scrooge McDuck Becomes Mr. Burns Boss

The pivotal question with the news of the massive $52.4 billion in stock buyout of 21st Century Fox by Disney is “Why would Disney do this?”

The answer is simple. The entertainment industry continues to evolve and Disney had its eye on the market share Fox was able to control with their original brand of entertainment. One of the main components of the deal is Sky, a pan-European satellite broadcasting company. Sky is an on-demand internet streaming media, broadband and telephone services company that is headquartered in London. In 2015, they reported over 30,000 employees and a subscriber base of more than 21 million. It isn’t known if Green Button advertising was part of the lure.

Fox owns 39% of Sky and Disney wanted it, and this was there in. Of course, Disney was also interested in their studio department, which has Avatar and X-men, two historically profitable franchises. This gives Disney a more global control. Disney sees the shift from conventional entertainment consumption and more to the streaming consumption, which Disney knows is the future of entertainment. Walt Disney, the founder of Disney, was one of the true innovators.

Why Would Murdock Sell?

One of the biggest questions on the other side of the deal, is if these assets are so valuable, why would Rupert Murdock want to sell them? Murdock stated on a call to investors that this was not a retreat, rather it was a pivot. Murdock understood that the world of entertainment was changing. The changes were happening faster than Murdock’s company could grow and keep up with. In other words, Murdock knew that they miscalculated the future of entertainment, and this move was to save his investors position.

Take a look at Netflix, which has completely changed how consumption of entertainment of television is done today. No longer do people want to sit down in front of the television at a certain time to watch their shows, instead, they want to be in control and watch their shows when they want to watch them.

This boils down to consumers being tired of being told when they can watch something and turning to the internet or streaming services to get what they want. However, a consumer is only going to subscribe to a streaming service if it has everything they want. Murdock knew he didn’t have the library of titles or series to compete on a world-wide scale, so an exit was his best strategy.

What is it going to mean for customers in the UK who subscribe to Sky?

The deal will take at least a year to go through. With a 39% stake in Sky, Disney may look to further acquisitions to gain a majority stake in Sky. Subscribers in the UK need to realize that Sky will be in the hands of Disney.

Some analysists believe that the move was done to allow Murdock to concentrate on Fox News and the Trump Presidency. 2018 will be an interesting year to see how both companies fare from this acquisition.