Disney would dominate the US box office if it buys Fox

Pixar. Wars of the stars. Marvel

Disney is already the king of the box office. And if the $ 71.3 billion business deal for most of 21st Century Fox goes through, it will add even more big-name franchises – including Deadpool, X-Men and Avatar. – to his list.

The end result: a company with an influence unmatched by any other traditional filmmaker.

This year's box office sales show how great the new super-business could be. Thanks to "Black Panther", "Avengers: Infinity War," "Incredibles 2" and "Deadpool 2", Disney ( DIS ) and Fox [19659006] ] FOXA ) together control nearly half of the domestic market share up to now in 2018, according to Mojo Box Office.

Barton Crockett, a senior badyst at FBR Capital Markets, expects the total to fall to about 40% by the end of the year, since both studios have already published many of their biggest titles.

But even that is an important part of the market. He said the merger could make Disney the "Walmart of Hollywood."

Imagine this: a company so big that it can corner the market on blockbusters even more than it already does, while at the same time sweeping all the coveted prices of l & # 39; industry. A company that dominates film channels and an order in the developing streaming market.

"They will have so much of that, that it will seem to be giving them a leverage in the supply chain," added Crockett. "That's what's happening in a world where a studio, mostly Disney, has a tremendous success in doubling its investments, and most other studios seem to be on their heels when it comes to making movies."

This kind of control has its advantages. For example, Crockett said the new Disney-Fox company would have a strong hand to play when it negotiates with movie theaters on the part it holds revenue from ticket sales.

Disney was already doing well in this regard. The Wall Street Journal reported last year that the company had received about 65% of "Star Wars: The Last Jedi" ticket revenue, an issue the newspaper describes as a new record for a Hollywood studio. Studios usually take 55%, according to the Journal.

"If they continue to increase their share of the national box office, it is difficult to escape the conclusion that they would have leverage over time to get a share still greatest movie recipes, "said Crockett.

Disney declined to comment on this story. But his representatives have publicly defended the studio combination, saying that Hollywood's market share is not a sure thing.

When the editorial board of the New York Times last week questioned the speed with which US antitrust officials approved the Disney-Fox deal, for example, the antitrust lawyer Disney fought back.

Market share concerns ignore competition from other studios, including Universal, Warner Bros, Paramount, Sony-Columbia, Lionsgate, Netflix and Amazon, wrote Thomas Barnett, who is a Disney antitrust attorney in the # Case, in a letter to the publisher.

Related: Disney wins antitrust approval to buy most of Fox

Barnett also dismissed attention over the last five months at the box office. On average, he writes, the combined share of Disney and Fox studios has been lower.

Historically, it was true. Both studios controlled about 35% of the national box office last year, according to Mojo Box Office. A decade earlier, they held about 27%.

But Crockett said the Disney today is stronger and better built to succeed than the Disney of the past. CEO Bob Iger has built an entertainment empire with Pixar, Star Wars and Marvel, all franchises his company has purchased over the past 12 years.

"It is fair to say that cinema is fickle: there are people who have a burning hand today and who are losing it tomorrow," Crockett said. And maybe that already happens to Disney, he added – "Solo: A Star Wars Story" disappointed when it opened in May.

Although Star Wars hesitates, however, Crockett says that Disney still has Marvel, Pixar, and the rest of his library.

"I think the sure badumption is that Disney will continue to have a lot of success at the national box office, and have a dominant share," he added.

Buying Fox would not only give Disney more blockbuster movies. The case also comes with prestige.

Disney would inherit Fox Searchlight, a Fox production and distribution arm that was cleaned up at the Oscars. The studio has played a role in three of the last five winners of the best film with "12 Years a Slave", "Birdman" and "The Shape of Water".

Disney has already played high-end cinema, said Jeff Bock, chief ticketing badyst at Exhibitor Relations. But the quality of adult fare and the level of diversity that Fox offers is at another level.

"These films have caused shock waves throughout the industry, they are durable, they are still green," added Bock. "They'll have something really amazing, and you just hope it stays self-sufficient enough so that the Mouse House does not spoil what Fox has already done."

Iger said that he did not want to change Fox Searchlight. At the company's annual meeting of shareholders in March, the Disney CEO said he had the intention to maintain the studio's activities .

But there are other questions about what the new "super-studio" looks like, Bock said, including how many movies that would produce.

He added that Disney did not have a ton of movies on its release schedule yet. And those that he puts out are mainly blockbusters.

"If a big studio suddenly disappears, it's a big concern for movie theater owners," Bock said.

Local theater owners consider volume as a potential problem.

"I have some concerns about what a Fox / Disney merger could mean for small operators like me," said Lee Akin, co-owner of a few theaters in Iowa and Wisconsin. "I am especially concerned that the number of films does not decrease."

The Question of Netflix

The box office is perhaps only a part of the equation. As other historical media companies have done this year, Disney and Fox are motivated to join forces to face tech giants like Netflix and Amazon ( AMZN ) .

These companies are turning the entertainment industry in the lead. Netflix ( NFLX ) alone is expected to spend up to $ 13 billion this year on shows, according to a report in The Economist. Apple ( AAPL ) also has the hope of signing agreements with Oprah Winfrey, Reese Witherspoon and Steven Spielberg.

Related: Oprah's strikes against Apple as the new Hollywood wars warm up

This kind of competition may have been in the minds of antitrust authorities who gave Disney-Fox two weeks ago some time ago, said Jonathan Barnett, a law professor at the Law School of the University of Southern California.

"The agency may have reasonably concluded that the theatrical exhibition is today only one part of a larger market for video content" , did he declare. The decline in movie theater attendance, for example, suggests that at least some people substitute a trip to the box office with a night on the couch.

If video streaming is considered part of the same market as theatrical releases, Barnett said that a company like Disney would have less control.

Concern about the concentration "would be significantly diminished," he added.

Related: Netflix looks all over the world to feed a growing audience

Akin, the owner of the local theater, also pointed out the power of digital newcomers as a problem.

"I would welcome great players to compete with the streaming services that I think are the real companies to watch for in the future," he said, adding that Disney and Fox would be able to "drive the future of the company to a greater extent than the other studios. "

The National Association of Theater Owners, an industry trade group, also suggested that Disney could act as a bulwark for traditional cinema. "Disney is the best protector of the theatrical window," group president and CEO John Fithian told the Hollywood Reporter in April, noting that Disney is also working on its own streaming service as a Netflix competitor.

The Future of Hollywood

In any case, Bock, the box-office badyst, said that the company was not a big deal. agreement could foreshadow changes in Hollywood.

"There is a studio upstairs, and the others are fighting for garbage," he said, adding that some competitors might want to team up. "It will be a kind of" us against them "."

But Bock also said that he hopes the merger could lead to more creativity elsewhere in the market, once the studios realize that they can not compete with a Disney production that costs $ 200 million or more.

He designated Paramount, the studio Viacom ( VIA ) who struggled for a long time. His latest film, "A Quiet Place", was a surprise hit when it debuted in April. The film made $ 187 million in the United States and costs only $ 17 million to produce, according to Mojo Box Office.

"I think it's going to be very inventive for these other studios," added Bock. "Maybe it will be great for making movies."

CNNMoney (New York) First published July 11, 2018: 16:34 ET