What The Disney-Fox Deal Means For Hollywood


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Mickey Makes A Major Hollywood Shake Up

While California continues to burn in the wake of tremendous wildfires, even more major news is coming out SoCal and shaking up Hollywood, in the form of on of the largest merger deals of all time. On Thursday, December 14th Disney acquired key 21st Century Fox assets with the price tag of (only) $66.1 billion. Despite the dust still settling, questions continue to swirl about studios, not to mention other businesses within the entertainment industry... Hollywood Branded included.

So what exactly will happen afterwards? What does the future of the entertainment world look like? Just how big of a deal is this? In this blog, Hollywood Branded will explore this new merge, answer prominent questions, and explain Disney-Fox deal means for Hollywood.

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The 'House Of Mouse' Adds Historic Fox To Ranks

As amazingly predicted by The Simpsons in "When You Wish Upon A Star" (Season 10, Episode 5) first airing in 1998, Disney has bought out Fox. No, we're not kidding, the writers can actually see into the future:

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Fast forward some odd thirty years to the present and Hollywood is on fire, wildfires aside, with this major studio shake up in the newest example of media consolidation to round out 2017.

So What's The Big Deal?

To get a better understanding of why this is SUCH a big deal, we're going to do another time jump to the year 1904, when Hungarian immigrant William Fox started hand-cranked film screenings in New York. Soon, the single theater grew to twenty-five, and in 1915 Fox moved to Los Angeles, leading up to the 1935 merger with 20th Century Pictures.

The following years would see classics come to life with Cleopatra, The Sound Of Music, and in 1977 Star Wars Episode IV: A New Hope made it's galactic debut (who funny enough would make the hop to Disney ahead of the studio down the road, but that's another story).  In fact... check out our blogs on Brand Partnerships Leverage Star Wars The Force Awakens Infographic and May The Branding Force Be With You, Brands Leverage Star Wars or Star Wars Promotion Partners Awaken A Force Of Brand Alliance 

Disney has done really well with their Star Wars brand partnerships! 

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In more recent years the 2010 release of Avatar by director James Cameron raked in $2.8 billion, making it the No. 1 highest grossing film of all time.  Also noteworthy, in 1981 Rupert Murdoch’s News Corporation bought into Fox, completing the ownership deal in 1984. Murdoch would then launch the Fox Broadcasting Company in 1986, which still runs to this day.

From there the rest is history, making Fox one of the largest and well-known studios of all time.

Which is why this new deal with Disney is taking the entertainment world by storm, a huge player in Hollywood has now been essentially gobbled up by another even bigger company! Taking with it the many films, television, and potential SVOD rights with them, and expanding Disney's power within the industry.

And if you're worried about Rupert Murdoch and his family, he is going to be A-Okay. According to recent reports from Time, the media outlet has confirmed the 86-year old media mogul (and by extension his family) now own 5% of Disney, roughly translated into an increased net worth of about $518 million, and when the deal eventually closes in full he'll find himself about $4 billion richer. Not to mention, as part of the agreement the Murdoch's have secured future seats on the company's board of directors.

So don't worry, Rupert and the rest of the Murdoch's are going to be just fine.

And before you ask, no, Disney doesn’t own all of Fox, only 20th Century Fox studios, both the film and television side, I.E. Fox’s 22 regional sports channels, cable entertainment brands FX and National Geographic. Additionally, Disney also acquired 30% share in Hulu which Fox HD previously held, making Disney the new majority shareholder in the streaming service -- which is a major win for the Mickey and Co.

Post-Merge Growing Pains

It isn't all smiles and pixie dust right now. With company mergers job redundancy is looked at immediately following in a classic 'too many cooks in the kitchen' scenario, and according to recent reports Disney is already clearing out cubiclesRich Greenfield, BTIG analyst with a long history crunching numbers in terms of Disney discussion, believes an estimated 5,000 to 10,000 jobs could be on the axing block. Greenfield provided a written explanation saying, “Disney expects over $2 billion in synergies from the Fox acquisition, with the overwhelming majority of that from cost-savings–meaning job cuts.” Of course immediate thoughts go with the expected lessening of film releases, which in itself is a form of job reduction that will have even bigger ramifications on production crew job loss in Hollywood, however it's believed more prominent layoffs are on the horizon. Greenfield continued, “In order to reduce costs by upwards of $2 billion, we believe Disney will need to cut well-over 5,000 jobs and the number could easily swell toward 10,000 given the high degree of overlap between the two companies around the world.”

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This is a tremendous amount of people in Hollywood who won't be able to be immediately absorbed back into the economy as new hires. Some of these people will be at a senior level, even close to retirement, and while we would hope their pensions (if they exist) and long-terms holdings are taken care of there are no guarantees when it comes to the entertainment industry. Another large majority will include newcomers to the workforce taking the infantile steps in what had hoped to be a long-term career, now they will most likely find themselves without a lot of established experience that will not exactly help lock in future job opportunities.

More news will likely follow in the next few weeks as to where and what departments will feel the brunt of the shake up, but for now the tension is definitely palpable going into the Holiday season.

Two Worlds, One Family? The Future Of Films

What do you get when a family-friendly powerhouse assumes a film company who regularly produces Oscar contenders?A lot of questions and uncertainty. Disney's bread and butter has always been with family kid-friendly content, and in recent years they have stretched out to explore blockbuster, popcorn flicks with purchases of Star Wars rights as well as nerd nexus Marvel.

However, 21st Century Fox is no stranger to adult films especially Fox Searchlight Pictures who every season eyes the Oscars and already boasts three awards for Best Picture for the films Slumdog Millionaire, 12 Years A Slave, and Birdman. Granted, Searchlight's parent company 20th Century Fox has yet to win any Academy Awards for Best Picture, however they continue to make films for possible contention. Most recently, The Post starring Tom Hanks and Meryl Streep coming to theaters Friday, December 22, has already been generating Oscar buzz.

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That isn't to say Disney has never seen the Oscars.  On the contrary, the company has 23 Academy Awards but none of them for Best Picture. Renowned classic Mary Poppins remains the only film nominated for Best Picture (at the 37th Academy Awards), however lost to My Fair Lady directed by George Cukor. The majority of the nominations -- and wins -- lead the Best Original Song category, the most recent winner of the title being 'Let It Go' from Frozen in 2013, adding to the expansive and impressive shelf.

Thus, the question remains: will Disney allow Fox to continue making movies aimed at a wide variety of audiences, I.E. adult-orientated films? Or will Disney wedge Fox into the same box as its other subsidiary studios, like Marvel and Pixar, who are responsible for a set number of films per year, all of which are expected to achieve certain box office benchmarks? More has yet to follow since the deal was struck, but if that’s the case, film fans will have lost something great as far as expansive plots, genres, and entertainment that speak to a more mature audience beyond the PG ratings. For now though, it's a waiting game.

Where Do Brands Go From Here?

Looking to navigate the uncertain waters of product placement of brand integration in Hollywood movies? Seeing as Disney is slowly becoming the largest market read a previous blog by Hollywood Branded for a comprehensive list of all Upcoming Disney Remakes (AKA Family Friendly Partnership Opportunities), and download our Product Placement 101 guide to find your footing in the new age of entertainment!

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