Thursday’s bombshell announcement that Disney will be be acquiring 21st Century Fox’s U.S. and global entertainment assets sent shock waves through the entertainment industry.
The deal is an all-stock transaction that allows Disney to obtain Twentieth Century Fox movie and TV studios; the company’s cable entertainment networks; including FX and National Geographic; international assets like Star and Sky; and its stake in Hulu for a cool $52.4 billion.
But what will it mean for the TV advertising industry? At least one industry expert believes the deal bodes well for Disney’s direct-to-consumer prospects.
“Disney realizes that in order for them to truly compete against their competitors, namely Netflix, they need to dial up their premium content offering,” said VideoAmp chief strategy officer Jay Prasad, adding that “Fox, to [its] credit, has done a great job with properly packaging cross-screen content and negotiating distribution deals.”
Disney’s acquisition of Fox’s entertainment assets could prove problematic for Netflix, which presently boasts a considerable amount of Disney-owned content, especially Marvel programming. Not only will the Marvel library head to Disney’s upcoming OTT service, which is set to launch in 2019, but the service could theoretically include content from the international assets it’s acquiring from Fox—namely European broadcaster Sky and Indian broadcaster Star.
“Disney is also going to leverage the wealth of Fox TV content, and jointly continue to invest in content,” Prasad said. “That market will get more heated as Facebook, Amazon, Apple, Netflix and Google continue to pour money into original content.”
On the other hand, Disney’s majority ownership will undoubtedly be a positive for Hulu. Disney will also acquire Fox’s 30 percent stake in Hulu, giving it 60 percent ownership of the streaming service. Comcast-NBCUniversal has a 30 percent stake, while Time Warner controls the remaining 10 percent. “Now that Disney has that control, look for them to increase their premium content on Hulu, a reversal of what we’ll see with Netflix,” Prasad said.