NEW YORK–Walt Disney Co. is close to a deal to acquire the global children’s-programming business, Fox Family Worldwide Inc., for $3.2 billion plus the assumption of $2.1 billion in debt, according to The Wall Street Journal.
Disney plans to convert the venture’s main U.S. channel, Fox Family, into a new entity called ABC Family that will rely greatly on recycled programming from the ABC Network and other Disney properties. The deal could be announced as soon as today.
The acquisition of Fox Family Worldwide from co-owners News Corp. and Saban Entertainment Inc. bolsters Disney’s position as a cable-TV leader, placing the U.S. Fox Family and its nearly 81 million subscribers alongside Disney’s existing powerhouses such as the ESPN networks and the Disney Channel. Disney also gets children’s cable channels that air in 73 countries, gaining a stronger foothold on international cable systems, and a 6,500-episode library that includes children’s favorites such as the “Mighty Morphin Power Rangers.”
Disney and its chairman and chief executive, Michael Eisner, have faced mounting pressure during the past year to keep pace with rivals, such as AOL Time Warner Inc., which have combined entertainment content with ownership of distribution mechanisms, including cable systems or Internet-service providers. With the Fox Family deal, Mr. Eisner has again chosen to keep Disney focused on its core strength of creating and aggregating content. He is betting an expansion of Disney’s cable-network fleet will give it the leverage necessary to ensure ubiquitous distribution of its programming.
However, people familiar with the company’s thinking stressed that the Fox Family acquisition doesn’t preclude other possible Disney deals. In the wake of Comcast Corp.’s bid for AT&T Broadband, according to people familiar with the matter, Disney has considered becoming an investor in potential rival bids for the AT&T Corp. unit in which it would partner with a cable operator. Such a complicated scenario may be difficult to pull together, however.
The planned Fox Family transaction, reported late Friday by The Wall Street Journal, is a victory for both Saban, a children’s-entertainment company controlled by television mogul Haim Saban, and News Corp., as well as a graceful ending for a rocky marriage. Late last year, Mr. Saban exercised his contractual right to force News Corp. to buy out his stake in the venture, but the two sides immediately sparred over what the business was worth. After the two were unable to agree on a value, they agreed to jointly sell the business.
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