Latest / Deal Alchemist / Disney Buys 21st Century Fox for $71.3B

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Disney Buys 21st Century Fox for $71.3B · Deal Alchemist

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00;00;00;00 - 00;00;24;13 Speaker 1 Welcome back to the deep Dive.
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You know, sometimes behind the really big corporate headlines, there's this whole other story playing
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out, tales of audacious gambits, corporate warfare, almost, that just completely reshape an entire industry.
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And today, we're dissecting one of those truly seismic events.
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The Walt Disney Company buying up huge chunks of 21st Century Fox.
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Now, this wasn't just, you know, a big business deal.
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00;00;24;13 - 00;00;49;11 Speaker 1 It felt more like a strategic offensive, really, a massive
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move to redefine entertainment as tech was disrupting everything.
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So our mission today is simple.
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Give you a clear, concise, but still deep breakdown of this monumental transaction.
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We're going to unpack exactly what happened, why these two media giants made such a
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high stakes play, how this colossal deal was actually forged, especially with all the competition
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and, crucially, what its lasting legacy has been for the industry and, well, for us.
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00;00;49;16 - 00;00;49;24 Speaker 1 Yeah.
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00;00;49;24 - 00;01;12;03 Speaker 2 And from a strategic view, what's really fascinating here is
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how this deal is almost like the case study for businesses facing huge technological shifts.
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It just powerfully shows how critical things like global scale, owning your distribution, vertical integration,
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having that deep well of intellectual property are in the digital age.
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It's absolutely a masterclass in strategy, but as we'll definitely get into.
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00;01;12;08 - 00;01;17;08 Speaker 2 It also highlights the immense risks involved financially and culturally
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when you bet that big.
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00;01;17;09 - 00;01;25;09 Speaker 1 Okay, absolutely.
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So let's ground ourselves first the basic facts.
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What exactly did Disney buy and when did this all officially go down?
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00;01;25;10 - 00;01;36;12 Speaker 2 Okay, so the first whispers were around November 2017, right?
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But the deal itself didn't officially close until March 20th, 2019.
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And the final price tag get this was approximately $71.3 billion 1 billion.
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00;01;36;13 - 00;02;02;00 Speaker 1 That number alone tells you something important happened.
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Exactly.
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Because that was way up from Disney's first offer, which is around $52.4 billion.
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That huge jump was purely because of a bidding war, which will definitely circle back
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to.
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And the structure of the deal itself was, well, pretty clever.
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It was a mix of cash and stock.
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Shareholders at 21st Century Fox could choose to take the cash or take Disney stock,
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and it ended up being roughly 5050.
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00;02;02;01 - 00;02;12;29 Speaker 2 Would give flexibility, right?
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Big shareholders like the Murdochs could keep a stake in the combined company if they
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wanted, get that stock benefit, while others could just cash out.
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Smart structuring, very smart.
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00;02;13;02 - 00;02;23;19 Speaker 1 But here's a key detail that sometimes gets lost.
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Disney also took on about $19.2 billion of Fox's existing net debt.
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That's a huge additional financial weight right from the get go.
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00;02;23;22 - 00;02;28;12 Speaker 2 19 billion in debt on top of the 71 billion
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price tag.
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That's enormous pressure.
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00;02;28;16 - 00;02;50;09 Speaker 1 It really is.
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So for that absolutely staggering sum plus the debt.
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What did Disney actually get and what was left behind to become the sort of
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leaner new Fox Corporation?
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Well, Disney's haul was just transformative for their content library.
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They got the legendary film studio 20th Century Fox, which they rebranded, you know, 20th
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Century Studios and Fox Searchlight, now Searchlight Pictures.
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00;02;50;11 - 00;03;02;10 Speaker 1 Fox 2000 was included to the unfortunately close that label
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later.
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And with the studios came that treasure trove of IP avatar, the X-Men, Fantastic Four,
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Deadpool, alien, planet of the apes, suddenly all under the Disney roof.
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00;03;02;13 - 00;03;04;28 Speaker 2 And on the TV side two, right.
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Huge production houses.
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00;03;05;00 - 00;03;26;01 Speaker 1 Huge 20th Century Fox television productions like The Simpsons, family
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Guy, Modern Family, This Is Us, just massive hitmakers now part of Disney Plus.
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They snagged key cable networks like Fox, National Geographic Partners, taking Fox's big 73% stake
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there and maybe the most critical piece for their streaming ambitions.
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Fox's 30% stake in Hulu, Hulu.
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00;03;26;03 - 00;03;28;18 Speaker 2 That gave them control, didn't it?
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Pushed them over 50%.
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00;03;28;24 - 00;03;45;06 Speaker 1 Exactly.
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Combined with what they already own.
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It gave Disney a commanding 60% stake in Hulu.
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Boom.
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Instant streaming dominance, basically.
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And internationally, they landed what many called the crown jewel star.
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India and its incredibly popular streaming service, Hotstar, which.
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00;03;45;06 - 00;03;51;17 Speaker 2 Just overnight made Disney a massive player in India a
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huge strategic international foothold.
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00;03;51;17 - 00;04;11;25 Speaker 1 Totally.
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Meanwhile, everything else, the stuff Disney didn't take that got spun off into a new
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separate company, the Fox Corporation.
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Much leaner focused.
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So that included the Fox broadcast network, My Network TV, Fox News, Fox Business, the
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big national sports channels like FS1, Fs2, Big Ten Network and all the local Fox
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TV stations across the country.
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00;04;11;26 - 00;04;33;16 Speaker 2 And that split, you know, it's really telling, shows this
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profound strategic judgment about where media was heading.
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You had Disney doubling down on global evergreen IP for streaming, and then you had
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the new Fox core focusing laser sharp on live ad supported stuff, news and sports,
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mostly domestic.
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It really highlights this divergence, this philosophical split on how industry leaders saw the future
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paths in the digital age.
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00;04;33;18 - 00;04;34;11 Speaker 2 Fascinating.
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00;04;34;16 - 00;04;49;13 Speaker 1 Okay, so we've covered the what a massive transfer of
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assets.
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Now let's really dig into the why.
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Why did these two giants make such a drastic move for Disney?
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It felt like they were going on the offensive right.
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Almost declaring war on the streaming upstarts.
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00;04;49;20 - 00;05;17;26 Speaker 2 It really was, I think, fundamentally about survival, but also
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about dominance.
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Disney's whole traditional business model, you know, movies to theaters, TV shows to cable licensing
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IP out there was facing a direct threat, a huge threat.
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Cord cutting was accelerating.
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Streaming platforms like Netflix were just exploding.
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It was hitting Disney's most reliable moneymakers, right where it hurt.
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Bob Iger, the CEO at the time, he saw that just tweaking things wasn't enough.
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00;05;17;27 - 00;05;19;07 Speaker 1 They needed a fundamental shift.
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00;05;19;08 - 00;05;30;01 Speaker 2 Exactly a complete transformation.
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They had to go from being a B2B content supplier, selling to cable companies to
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theaters, to becoming a B2C tech and entertainment company owning that direct relationship with the
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consumer.
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00;05;30;03 - 00;05;35;18 Speaker 1 So the Fox deal was basically loading up the cannons
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for the streaming war, getting the ammunition they needed.
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00;05;35;20 - 00;06;01;19 Speaker 2 That's a great way to put it.
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Absolutely.
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If you're going to launch a streaming service, Disney+ may and expect it to compete
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with Netflix from day one.
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You need a massive library not just your own stuff, but way more volume, way
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more variety.
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The Fox acquisition provided that critical mass it was, I'd argue, the core motivation populate
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Disney Plus may make it instantly valuable and, crucially, let Disney pull its hit shows
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and movies off Netflix.
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00;06;01;21 - 00;06;05;06 Speaker 2 So you strengthen yourself and weaken your main competitor in
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one go.
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00;06;05;08 - 00;06;10;28 Speaker 1 Right?
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Because even Disney's amazing library wasn't quite enough on its own, especially for all audiences.
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00;06;10;28 - 00;06;21;06 Speaker 2 Precisely, it was powerful.
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Legendary even, but maybe not broad enough demographically, or just sheer volume wise to win
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that streaming war alone.
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Fox filled those gaps.
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00;06;21;06 - 00;06;41;23 Speaker 1 And beyond just feeding the streaming beast, there was this
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huge consolidation of really valuable intellectual property.
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I mean, getting the Marvel characters back was massive news.
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Oh, for fans, it was enormous.
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Finally bringing the X-Men, Deadpool, the Fantastic Four back into the fold with the rest
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of the Marvel Studios characters years of waiting for that.
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It just unlocked huge storytelling potential for the MCU.
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00;06;41;29 - 00;06;42;27 Speaker 2 And not just Marvel.
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00;06;42;27 - 00;07;02;28 Speaker 1 Not at all.
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You got James Cameron's Avatar with all those sequels planned, plus massive cultural touchstones like
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a Simpsons, alien, predator, planet of the apes, all that IP now consolidated under Disney,
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ready for films, TV shows, theme parks, merchandise.
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It built this incredible content moat, as they say.
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00;07;02;28 - 00;07;04;04 Speaker 2 A fortress of IP.
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00;07;04;04 - 00;07;30;09 Speaker 1 Exactly.
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And it did something else really important to you, right?
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It helped Disney broaden its appeal.
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Yeah, that's a key point.
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Disney you know its core brand is powerful but very family focused to really go
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head to head globally with Netflix, which had everything Disney needed more variety, more adult
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skewing stuff.
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Fox brought that in spades.
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You get the edgier, critically acclaimed series from FX Think The Americans, Atlanta, you get
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the Oscar winners from Searchlight like The Shape of Water, you get R-rated franchises.
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00;07;30;09 - 00;07;36;15 Speaker 1 It's strategically planned, a huge gap, especially for a platform
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like Hulu, letting Disney offer something for basically everyone.
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00;07;36;18 - 00;07;52;09 Speaker 2 Okay, so that's the Disney side offense content scale, but
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what about Fox?
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Why would Rupert Murdoch agree to sell off huge parts of the empire he'd spent
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decades building?
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This wasn't necessarily admitting defeat.
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Was it?
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More like a strategic pivot?
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00;07;52;12 - 00;08;15;00 Speaker 1 I think that's exactly right.
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It was a very pragmatic repositioning.
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Murdoch and his team, they looked at the landscape, these giant vertically integrated tech companies
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like Netflix, Amazon, Apple, Google pouring billions into content and global distribution.
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And they realized that scale was everything Fox was big, sure.
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Very successful, but maybe, just maybe not big enough for that next phase.
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00;08;15;00 - 00;08;20;18 Speaker 1 They tried to get bigger themselves.
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Remember, they made that $80 billion bid for Time Warner back in 2014, right.
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00;08;20;18 - 00;08;21;17 Speaker 2 Which ultimately failed.
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00;08;21;18 - 00;08;32;09 Speaker 1 Exactly.
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And when that didn't happen, selling the entertainment assets to an even larger player like
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Disney probably started to look like the smartest way to maximize value for their shareholders.
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They essentially de-risked the business.
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00;08;32;09 - 00;08;54;09 Speaker 2 How so?
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Well, they sold off the parts most vulnerable to streaming disruption, the parts needing massive
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ongoing investment, the movie studios, the general entertainment channels, and the new Fox Corporation.
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It became this leaner, arguably more focused company centered on the highly profitable live news
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and sports businesses, which are less disrupted by on demand streaming.
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00;08;54;13 - 00;08;58;15 Speaker 1 So keep the reliable cash cows sell, the riskier, capital
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intensive parts.
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00;08;58;15 - 00;09;17;01 Speaker 2 Pretty much.
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It raises that classic strategic question, doesn't it?
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In a world where some players seem to have almost infinite capital and global reach,
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when do you fight head on and when do you strategically retreat to defend a
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really profitable niche?
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Fox's move was a powerful, pragmatic answer from someone who built an empire.
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00;09;17;03 - 00;09;28;29 Speaker 1 Okay, so the why is clear survival scale, strategic repositioning,
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but the how?
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This wasn't just a friendly negotiation across the table, was it?
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It turned into a real corporate battle, a bidding war.
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Tell us about that.
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00;09;29;00 - 00;09;39;14 Speaker 2 Oh, it was absolutely a battle royale.
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So remember, Disney first announced its deal in December 2017, $52.4 billion.
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All stock seemed done.
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But then Comcast, owner of Nbcuniversal, stepped in.
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00;09;39;20 - 00;09;41;10 Speaker 1 Why did Comcast get involved?
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00;09;41;17 - 00;09;56;11 Speaker 2 They saw the same things Disney saw.
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They looked at a combined Disney Fox and felt, oh, we need that kind of
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scale too.
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They needed the content.
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The international reach, especially Fox's stake in the big European pay-TV companies Sky.
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That was a huge price.
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00;09;56;12 - 00;09;58;27 Speaker 1 So they decided to crash the party big time.
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00;09;59;00 - 00;10;14;09 Speaker 2 In June 2018, Comcast came in with a formal counteroffer
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a massive $65 billion.
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And significantly, it was all cash.
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That was a direct challenge, about 19% higher than Disney's initial stock offer.
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It put serious pressure on.
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00;10;14;09 - 00;10;18;14 Speaker 1 Disney, and Disney didn't blink.
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They came back swinging almost immediately.
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00;10;18;16 - 00;10;30;18 Speaker 2 Within a week, Disney fired back with a revised offer.
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They blew Comcast out of the water $71.3 billion over $6 billion.
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More and crucially, they changed their offer structure.
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00;10;30;19 - 00;10;32;07 Speaker 1 The cash and stock mix.
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We talked about earlier.
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00;10;32;07 - 00;10;43;27 Speaker 2 Exactly.
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Roughly 50% cash, 50% stock.
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This was kind of a masterstroke.
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It gave Fox shareholders the security of cash and the potential upside and tax advantages
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of holding Disney stock.
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It addressed all the potential concerns and that was.
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00;10;43;27 - 00;10;44;28 Speaker 1 Enough to win the day.
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00;10;45;04 - 00;11;02;13 Speaker 2 It was faced with that much higher offer, the hybrid
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structure and the clear preference of the Fox board for the Disney deal.
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Comcast officially backed down from bidding for the Fox assets in July 2018.
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They did, however, pivot and ended up winning the separate battle for Sky.
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00;11;02;13 - 00;11;08;29 Speaker 1 Wow, so that bidding war directly added almost $20 billion
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or like 36% to the final price tag.
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Great for Fox shareholders.
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00;11;08;29 - 00;11;17;25 Speaker 2 Fantastic for them.
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But it meant Disney was taking on a much bigger financial commitment than they originally
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planned.
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The significantly heavier burden from day one.
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00;11;18;01 - 00;11;40;16 Speaker 1 So the price is finally settled.
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The war is won.
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But then came another huge hurdle regulatory approval.
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Merging two giants like this, that's going to attract a lot of scrutiny, right.
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Antitrust concerns?
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Absolutely.
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You can't just combine two of the biggest players without regulators taking a very close
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look.
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In the US, the Department of Justice, the DOJ.
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Their main concern was about competition in sports programing, specifically cable sports.
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00;11;40;17 - 00;11;42;04 Speaker 2 Because Disney owns ESPN, right?
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00;11;42;10 - 00;11;58;13 Speaker 1 Exactly.
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Disney's ESPN plus, all of Fox's 22 regional sports networks.
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The reasons that broadcast local MLB, NBA, NHL games, that combination would have given them
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enormous power, potentially monopoly power in many local markets.
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00;11;58;14 - 00;11;59;28 Speaker 2 So the DOJ demanded a.
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00;11;59;28 - 00;12;16;15 Speaker 1 Fix they did.
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As a condition for approving the deal, the DOJ mandated that Disney had to sell
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off all 22 of those Fox runs within 90 days of the deal closing.
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That was a major divestiture, a big concession to preserve competition and local sports broadcasting.
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00;12;16;17 - 00;12;20;26 Speaker 2 Okay, so that handled the US sports concern.
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What about internationally, Europe, for instance?
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00;12;20;27 - 00;12;30;04 Speaker 1 Yeah, the European Commission had its own focus.
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They were less worried about sports and more concerned about the market for what they
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call factual channels.
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Think documentaries, history programs, that sort of thing.
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00;12;30;04 - 00;12;31;24 Speaker 2 Like Discovery Channel or history.
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00;12;31;25 - 00;12;46;23 Speaker 1 Precisely.
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They saw an overlap between Disney's existing ownership stake in a plus E!
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Television networks, which includes History channel, H two, etc., and Fox is very strong National
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Geographic channels.
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They felt combining those would reduce competition in that factual programing space in Europe.
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00;12;46;24 - 00;13;01;29 Speaker 2 So another concession required.
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Yep.
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To satisfy the SEC, Disney had to commit to selling off its entire ownership stake
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in those eight plus E!
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Television networks across the whole European Economic Area.
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Another significant divestment.
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00;13;02;01 - 00;13;05;01 Speaker 1 It's interesting how fragmented that regulatory process was.
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00;13;05;07 - 00;13;27;02 Speaker 2 It really is.
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The US focused on domestic sports.
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The EU focused on factual channels in Europe, each looking at their specific piece of
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the puzzle.
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And you know, this approach allowed the Mega-Merger to go through by basically satisfying these
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individual national or regional requirements.
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But it does make you wonder, doesn't it, whether anyone truly assessed the total cumulative
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global impact of creating such a massive, consolidated media powerhouse?
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00;13;27;09 - 00;13;30;11 Speaker 2 Was the whole picture ever fully scrutinized on a global
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level?
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00;13;30;14 - 00;13;56;06 Speaker 1 Probably not.
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That's a really interesting point.
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Okay, so the deal is done.
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Regulators are satisfied the assets have changed hands.
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Now the real work begins.
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Integration.
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How did this massive undertaking actually start to change Disney and the industry?
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Let's, let's start with the money.
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The financial impact.
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Well, as you'd expect, Disney's overall revenue shot up jumped from about $59 billion in
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2018 to nearly $70 billion in fiscal 2019, right after the deal closed.
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00;13;56;09 - 00;13;57;27 Speaker 1 Big top line growth the.
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00;13;57;27 - 00;13;59;25 Speaker 2 Growth funded by a lot of debt, a.
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00;13;59;25 - 00;14;18;16 Speaker 1 Lot of debt.
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Remember that $71 billion price plus the $19 billion in assumed debt?
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It caused Disney's total debt load to just explode.
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It went from around $18.5 billion before the deal to $48.5 billion right after in
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fiscal 2019.
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And it kept climbing, hitting almost $62 billion by fiscal 2020.
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00;14;18;17 - 00;14;25;16 Speaker 2 Wow.
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That's a crushing amount of debt that has put enormous pressure on profitability, right?
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Higher interest payments.
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Plus, they issued tons of new stock to.
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00;14;25;24 - 00;14;41;27 Speaker 1 Exactly over 300 million new shares were issued as part
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of the deal, which diluted earnings per share for existing shareholders.
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And yes, the higher debt meant much bigger interest payments eating into profits.
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So short term profitability definitely took a hit.
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00;14;41;29 - 00;14;45;08 Speaker 2 Of course, the flip side is they aim for cost
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savings, right?
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Synergies.
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00;14;45;09 - 00;14;57;03 Speaker 1 They did.
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They publicly targeted at least $2 billion in annual cost savings by 2021.
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That meant finding efficiencies, getting rid of redundant roles and unfortunately, workforce reductions.
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00;14;57;04 - 00;15;05;23 Speaker 2 Which brings us to the human side the integration challenge,
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mashing together two huge companies with very different cultures.
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That sounds incredibly difficult.
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00;15;05;24 - 00;15;18;25 Speaker 1 Arguably the hardest part you had Disney known for being
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pretty centralized, very brand focused, definitely family friendly in its image.
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And then you had Fox, much more decentralized, known for being more entrepreneurial, often edgier,
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giving creators more leeway.
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00;15;18;25 - 00;15;21;03 Speaker 2 Perhaps that sounds like a culture clash waiting to happen.
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00;15;21;10 - 00;15;45;00 Speaker 1 And by many accounts, it was.
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You have stories, reports from former Fox employees feeling like they'd lost creative freedom, that
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things became more bureaucratic under Disney.
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It wasn't smooth, and achieving those $2 billion in savings inevitably meant job losses painful
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ones.
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Estimates vary, but somewhere between 4000 and maybe even 7500 jobs were eliminated across the
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combined company.
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That's a significant human cost.
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00;15;45;00 - 00;15;47;13 Speaker 2 Plus the symbolic changes like the studio names.
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00;15;47;13 - 00;16;00;29 Speaker 1 Right?
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Rebranding 20th Century Fox to 20th Century Studios and Fox Searchlight Pictures to just Searchlight
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Pictures, removing the Fox name.
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And then there was the controversial decision to shut down the Fox 2000 label entirely,
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which.
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00;16;00;29 - 00;16;04;12 Speaker 2 Had a reputation for successful mid-budget movies.
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Right?
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Yeah.
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Dramas.
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00;16;04;12 - 00;16;16;25 Speaker 1 Comedies, exactly.
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Things that weren't necessarily huge blockbusters.
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Shutting it down was seen by some critics as Disney narrowing its focus too much,
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maybe only wanting giant tentpole films and neglecting that middle ground.
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00;16;16;26 - 00;16;24;17 Speaker 2 Okay, so a tough integration, huge financial pressure.
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But what about the performance?
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Did this strategic bet pay off, especially in streaming?
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00;16;24;20 - 00;16;51;01 Speaker 1 Now here's where the story gets really interesting, because it's
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kind of a tale of two cities on the streaming front, an absolutely massive, unqualified
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success.
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The core strategic reason for the deal worked that huge Fox library was absolutely critical
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for launching Disney+ in November 2019.
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Suddenly, Disney Plus wasn't just Disney classics, it had The Simpsons, avatar, National Geographic docs,
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tons of stuff right from day one.
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00;16;51;08 - 00;16;54;01 Speaker 2 Instant scale and appeal beyond kids and family?
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Totally.
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00;16;54;01 - 00;17;09;05 Speaker 1 And it fueled just explosive growth.
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Disney Plus hit 100 million subscribers in just 16 months.
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It took Netflix something like a decade to reach that number.
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And the Star India Hotstar acquisition genius move for international growth, especially in Asia.
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00;17;09;07 - 00;17;13;00 Speaker 2 So streaming huge win.
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What about the other side?
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Theatrical films.
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00;17;13;03 - 00;17;28;02 Speaker 1 That's where it's been much more inconsistent.
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Mixed results really.
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Yes.
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Avatar The Way of Water was a colossal success.
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Billions at the box office.
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But many other films released under the 20th Century Studios banner since the acquisition have
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frankly struggled.
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Underperformed expectations.
24:14
00;17;28;02 - 00;17;28;26 Speaker 2 What do you think that is?
24:18
00;17;29;03 - 00;17;47;12 Speaker 1 Well, there's debate is Disney's marketing machine, which is so
24:24
perfectly tuned for launching Marvel Movies or Disney Animation as good at marketing.
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The more diverse, sometimes more adult focused films that came from Fox.
24:34
Maybe not.
24:35
Maybe the integration issues impacted production or greenlighting decisions.
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It's complex.
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00;17;47;12 - 00;18;12;27 Speaker 2 So it highlights this strange paradox, doesn't it?
24:46
Disney bought Fox for its different kinds of content specifically to win at streaming, and
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that worked brilliantly.
24:53
But Disney's own core identity, its corporate culture, seems to struggle sometimes to effectively manage
24:59
and market those very differences within its traditional theatrical model.
25:03
It just underscores how incredibly hard it is to run truly distinct, creative brands under
25:09
one giant, highly centralized corporate roof.
25:12
00;18;13;00 - 00;18;15;29 Speaker 2 What makes Marvel work might not work for Searchlight.
25:17
00;18;16;01 - 00;18;42;09 Speaker 1 Absolutely.
25:20
So stepping back, what did this earthquake mean for the whole media industry landscape?
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What are the big strategic implications?
25:28
Well, first and foremost, consolidation.
25:30
This deal slammed the accelerator on media consolidation.
25:33
Hollywood's traditional Big Six studios instantly became a big five.
25:37
If you look at 2019 box office share in the US that combined Disney and
25:43
Fox accounted for nearly 40% to a staggering market power.
25:47
00;18;42;10 - 00;18;45;29 Speaker 2 Which inevitably triggers reactions.
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Right?
25:52
Other players feeling they have to bulk up, too?
25:56
00;18;46;00 - 00;19;09;05 Speaker 1 Exactly.
25:58
You saw WarnerMedia merge with discovery soon after forming Warner Bros.
26:02
Discovery partly as a response to Disney's scale.
26:06
It kicked off this new phase of consolidation among the legacy media players trying to
26:12
compete.
26:13
And it massively escalated the streaming wars.
26:16
What started as maybe Disney versus Netflix became this all out, high stakes conflict among
26:22
a handful of absolute behemoths Disney, Netflix, Warner Bros.
26:25
00;19;09;07 - 00;19;11;16 Speaker 1 Discovery, Comcast, Apple, Amazon.
26:29
00;19;11;16 - 00;19;13;08 Speaker 2 And the cost of entry just went through the roof.
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00;19;13;13 - 00;19;34;06 Speaker 1 Through the roof.
26:38
Suddenly you needed not just hit shows, but massive global IP libraries, your own international
26:44
streaming platforms, and the willingness to spend billions, literally billions on new content every single
26:50
year.
26:52
It made streaming unprofitable for almost everyone for a long time, chasing subscriber growth at
26:58
all costs.
26:59
00;19;34;07 - 00;19;44;05 Speaker 2 And what does that level of consolidation, that intense focus
27:05
on giant franchises for streaming?
27:07
What does that mean for creativity, for new ideas?
27:11
00;19;44;06 - 00;20;00;23 Speaker 1 That's the big concern, isn't it?
27:15
Fewer major studios means fewer buyers for original scripts, for riskier ideas.
27:20
The immense financial pressure from streaming losses and that mountain of debt incentivizes playing it
27:26
safe.
27:28
Focus on the known quantities, the sequels, the reboots, the big franchises.
27:32
00;20;00;24 - 00;20;04;29 Speaker 2 Less room for mid-budget movies, for indie voices, for creative
27:38
experimentation.
27:40
00;20;04;29 - 00;20;24;23 Speaker 1 Perhaps that's the fear.
27:43
Fewer swings at original ideas.
27:45
More reliance on formula.
27:47
We'll see how it plays out long term.
27:50
But you know, despite the concerns, there are undeniable lessons here for any business leader
27:56
facing disruption.
27:58
This deal is maybe the ultimate case study in a few key principles.
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Like what one the absolute imperative of global scale in today's market.
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00;20;24;24 - 00;20;36;23 Speaker 1 If you're competing digitally, you need to be global.
28:13
Two vertical integration.
28:15
Controlling everything from making the content to delivering it directly to the consumer is a
28:21
massive competitive weapon.
28:22
It creates a powerful ecosystem.
28:24
00;20;36;24 - 00;20;37;09 Speaker 2 And the third.
28:28
00;20;37;13 - 00;21;00;27 Speaker 1 Decisive action when you see disruption coming, you can't just
28:34
tinker.
28:35
Iger's move.
28:37
Buying Fox was incredibly bold, preemptive, made from a position of strength.
28:41
Sometimes the biggest risk is not acting decisively and quickly enough.
28:46
So this deal wasn't just about balance sheets and market share.
28:50
It fundamentally rewired how stories get made, how they reach us, and who controls that
28:56
process.
28:58
00;21;00;29 - 00;21;10;18 Speaker 1 It really cemented that direct to consumer streaming model as
29:04
the future made deep content libraries the ultimate prize, and just completely redrew the map
29:10
for entertainment in the 21st century.
29:12
00;21;10;21 - 00;21;32;15 Speaker 2 Yeah, you have to say, strategically, it was brilliant in
29:18
many ways at ARM Disney perfectly for the streaming wars, achieved that global scale they
29:24
needed.
29:26
But while the cost was monumental, that mountain of debt, we talked about the really
29:32
painful integration, thousands losing their jobs and creating this level of market concentration.
29:37
It does raise legitimate, long term questions about creative diversity, about who stories get told.
29:43
00;21;32;17 - 00;21;34;00 Speaker 2 It's a complex legacy.
29:46
00;21;34;00 - 00;22;03;21 Speaker 1 So what does this mean for you listening right now?
29:52
Well, we're all living in this new world every day, right?
29:57
Choosing between just a handful of giant streaming services, seeing the kinds of movies and
30:03
shows that get made, maybe wondering what cool original ideas aren't getting through this new
30:09
consolidated system.
30:10
For us, the big lingering question is this will those long term strategic gains, that
30:16
global streaming dominance, Disney sort ultimately outweigh the colossal financial and cultural costs it took
30:22
to get there?
30:24
00;22;03;23 - 00;22;17;24 Speaker 1 And maybe more importantly, how will this ongoing battle among
30:30
these media titans continue to shape the stories we see, the way we get them,
30:36
and maybe even how we think for generations to come?
30:40
Definitely something to mull over.
30:42
We'll leave you with that thought until our next deep dive.