Disney just confirmed the biggest reason he acquired Fox – The Fool Motley



When Disney (NYSE: DIS) Last Thursday revealed the details of its upcoming Disney + streaming service, shares of the entertainment conglomerate jumped 11.5% Friday in response, marking its greatest popularity in a day of the decade.

After all, at just $ 6.99 a month or $ 69.99 a year – or just over half of the $ 13 a month Netflix (NASDAQ: NFLX) is currently billing its most popular package – it is clear that the House of Mouse wants consumers to consider Disney + as a boon to other streaming video services from its launch in November. In addition, the company predicts that Disney + should be able to achieve profitability by 2024, with 60 to 90 million subscribers by the end of the year.

Although much more pronounced, this increase also recalled Disney's immediate increase at the end of 2017, when it announced for the first time that it would acquire most of its assets. Twenty first century (NASDAQ: FOX)(NASDAQ: FOXA).

Do not get me wrong, since much of Fox's content will be offered alongside Disney's existing portfolio, it's no coincidence that this huge $ 71 billion deal has just come to fruition. conclude a few weeks ago. In fact, according to Disney's management, the purchase of the Fox would not it's gone if it had not been an integral part of Disney's ongoing vision.

Disney + streaming interface on multiple devices, including a TV, smartphone, and tablet

SOURCE OF IMAGE: DISNEY.

Disney's $ 71 billion bet on streaming

In an interview with CNBC last week, Disney General Manager Bob Iger said:

We would have done [the Fox] transaction we had not decided to go in that direction. Because, otherwise, we would have considered this activity from a traditional point of view: "Oh, we buy TV channels. We buy more film production capacity, "etc. But in due course, the opportunity for acquisition came, and we knew we were going into this [streaming] space, we evaluated what we were buying through this new lens of "Wow, what would National Geographic mean for us?"

Of course, the fact that Disney can now complement its studios, parks and resorts, media networks and consumer products segments with Fox's film and television franchise portfolio, includes: dead Pool, Avatar, X Men, The four fantastics, This is us, Modern family, The simpsonsand (as noted Iger) National Geographic. Disney also took over FX Networks and doubled its stake in Hulu, which is now 60% controlled.

But, coupled with Disney's already enviable content – eponymous studios and TV channels in Marvel, Lucasfilm, Pixar and ABC – nothing can deny that the considerable number of family titles within Fox's assets strengthens Disney's value proposition + in a way that Disney simply could not achieve alone. If that were not enough, Disney also announced last week its intention to invest $ 1 billion in the production of original content for Disney + by the end of next year, including in series depicting the intrigues of specific characters from Star Wars, Marvel and Legacy.

In the end, however, it is clear that Disney believes that his streaming projects would not have materialized without Fox's help. And if all goes as planned, the combination could positively transform the media landscape continuously – and the value of Disney's shareholder portfolios – as we know them.


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